Weighting of food and beverages to be cut sharply in new CPI series
India will sharply reduce the food and beverages weight in the CPI basket as part of a 2024 base-year revamp, aiming to better capture evolving consumption patterns
 "Weighting of food and beverages to be cut sharply in new CPI series")
India’s inflation measurement framework is set to undergo a structural shift, with the weight of food and beverages in the Consumer Price Index (CPI) proposed to be sharply reduced in the new series to 36.75 per cent from 45.86 per cent in the current 2011-12 series.
This will be part of a larger overhaul of the CPI series, with the 2024 base year scheduled for release on February 12, 2026. The new series aims to better capture evolving household spending patterns, amid digital and service-led growth.
The series will comprise 358 weighted items, mapped to 12 divisions, 43 groups, 62 classes and 192 sub-classes, in accordance with the Classification of Individual Consumption According to Purpose (COICOP) 2018 classification. “Since HCES was not aligned with this classification structure, necessary grouping or splitting of the items will be done based on available reliable data sources, wherever required,” said the expert group report on CPI updation, released by the Ministry of Statistics and Programme Implementation (Mospi) on Thursday.
Price data will be collected from 1,465 rural markets and 1,395 urban markets across 434 towns. To embrace the digital economy, prices from 12 e-commerce platforms in large towns (over 25 lakh population) will be collected weekly, alongside centralised sourcing for rail fares, fuels, telecommunication (major operators like Jio, Airtel), and OTT services (Netflix, Amazon Prime).
Methodologically, elementary indices will switch to Jevons short-chain formula from long index, eliminating base price dependency for efficiency and quality adjustments, and aligning with IMF and G20 practices.
“In the case of gold and silver jewellery, in line with international practice, the group recommended to adopt the approach of defining standard jewellery items that are likely to be available consistently in the market, rather than attempting to price customised pieces,” the report noted.
SBI Research estimates the new weights could nudge overall CPI up 20-30 basis points on unchanged indices. “While, in the months when food inflation is higher, the new CPI will be low by 20-30 bps,” it added.
To align the base year, or price reference period as closely as possible with the weight reference period, base prices have been collected between January and December 2024. As these prices pertain to 2024, the new CPI series will take 2024 as the base year, with the index set at 100.