Our macro data update will improve outcomes

India' vastly improved consumer price index for measuring retail inflation should lead to better policy formulation and therefore superior results. It matters to India in multiple ways

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India’s new consumer price index (CPI) series, released last week by the statistics ministry as part of a huge two-year long exercise to revise key macroeconomic variables, is a marked improvement over the one it has replaced.

The CPI’s base year, methodology and coverage have been updated to better reflect what Indian households consume. Its base year is now 2024, far more recent than the old series’ 2012. Its basket of items whose retail prices are tracked has been churned in line with findings of the 2023-24 Household Consumption Expenditure Survey (HCES). The weights assigned to various items represent actual spending patterns across the country far better than before. Consider. Back in 2012, India was only a $1.83 trillion economy. By 2024, it was $3.91 trillion. Yet, despite this more-than-doubling of our GDP and nearly 90% increase in per capita income—from $1,429 in 2012 to $2,695 in 2024-retail inflation numbers were based on an outdated basket. That this has been rectified isa relief.