The nascent Consumer Price Index (CPI), which debuted in 2011, is set to undergo an overhaul —weights of various items, as well as the base year, would now be changed.
Released by the Central Statistics Office (CSO), CPI for rural and urban areas would have weights revised — from those based on National Sample Survey Organisation (NSSO)’s 2004-05 consumer expenditure survey to those based on the 2011-12 survey, which is completed, but yet to be processed. The new series would be available from the end of 2013 or early 2014, said officials from the Ministry of Statistics and Programme Implementation (Mospi).
Currently, food items have the highest weight in the retail price index---about 50 per cent. In rural areas, this stands at nearly 60 per cent and 37.15 per cent in urban areas.
NSSO had concluded the consumer expenditure survey in June, and it would take about a year to process the data. The CSO would take about another six months, Mospi officials said. Though NSSO has also brought out a consumption expenditure survey for 2009-10, weights are not assigned on that report because 2009 had seen a severe drought. Therefore, NSSO had carried out another survey for 2011-12. The preliminary finding of the survey did not disclose the amount spent on various items; it stated the amounts spent by various income classes, on a monthly basis.
If the 2009-10 survey is considered, the share of food in the total expenditure declined to 53.6 per cent in rural areas from 55 per cent in the 2004-05 survey, though 2009 was a drought year, when farmers’ incomes were hit. The share of non-food expenditure rose from 45 per cent in 2004-05 to 46.4 per cent in 2009-10.
In urban areas, the share of expenditure on food declined from 42.5 per cent to 40.7 per cent, while the share of expenditure on non-food articles rose from 57.5 per cent to 59.3 per cent.
Also, for the CPI, the base year would be changed to 2011 to bring it on the lines of the NSSO survey, officials said. This might also see the addition of new items recorded by CPI, in case there is an increase in the consumption of a particular product. “Products that would show significant consumption will be included,” said a Mospi official.
Items included in CPI are those, for which more than 75 per cent households have reported consumption; which account for 1 per cent or more of total expenditure at sub-group level.
This revision is in compliance to the International Standard Industrial Classification of All Economic Activities, which is a United Nations system for classifying data that calls for revision of indices once in 5 years.
Besides, the scope of collection may be expanded to more villages and towns, depending on the manpower for data collection. This would be decided by the technical advisory committee of MoSPI.
The Wholesale Price Index, which has the base year 2004-05, is also under the process of revision to present a better picture of the price situation in the economy, by a committee headed by Planning Commission Member Saumitra Chaudhuri. WPI was revised earlier.
