New CPI reflects modern spending trend

Inflation overhaul

- Manjul Paul

India’s Consumer Price Index (CPI) is finally getting a reset.

Today, the statistics ministry will roll out a revised CPI series with a new 2024 base year, replacing the 2012 base year that has measured inflation for over a decade. The new series updates both the base year and methodology to reflect how Indian households actually spend today, using findings from the Household Consumption Expenditure Survey, 2023-24.

Mint examines some key changes, and why it matters:

How will inflation readings change under the new CPI?

At the heart of the CPI revamp is a recalibration of weights across spending categories. The most consequential shift is the reduced weight of food and beverages, which falls to 36.8% of the CPI basket from 45.9%. Within this, food alone drops from 39.1% to 34.8%.