Revising the consumption basket

Changing the components of the consumer price index is a detail-oriented exercise that requires the attention of all stakeholders

Food inflation continues to be in the news. A research article published in the Reserve Bank of India’s (RBI) January 2024 monthly bulletin made a strong case for understanding the behaviour of food inflation and why it needs to be taken into account for the conduct of monetary policy. Speaking after the meeting of the Monetary Policy Committee in August 2024, the Governor of the RBI opined that “food inflation pressures cannot be ignored”. For reasons outlined below, discussions on food inflation will become more nuanced once the consumption basket is revised in line with the patterns