12 Feb 2026·Source: The Hindu

4 min

EconomyEDITORIAL

CPI Base Revision: Reflecting India's Evolving Consumption Patterns

CPI base revision from 2012 to 2024 reflects changing household expenses and economic shifts.

Editorial Analysis

The revision of the CPI base year is essential to ensure that it accurately reflects the current economic realities and consumption patterns in India, thereby informing effective policy decisions.

Main Arguments:

The CPI base revision from 2012 to 2024 is necessary due to significant economic changes, urbanization, service sector expansion, and evolving digital platforms.
The updated CPI series uses the latest Household Consumption Expenditure Survey of 2023-24 to adjust weightage for different goods and services.
The revised CPI aligns more closely with international standards, facilitating comparisons of India’s inflation with other countries.
Data collection for the CPI has been upgraded to include online prices and computer-assisted price collection, improving accuracy and timeliness.

Conclusion

The ongoing CPI base revision exercise ensures that the CPI remains accurate, up-to-date, and consistent, serving as a true mirror capturing the realities faced across the country.

Policy Implications

The updated CPI will better inform monetary policy decisions by the Reserve Bank of India, as well as adjustments to income and social security programs, ensuring they are responsive to the actual cost of living.

The article discusses the ongoing revision of the Consumer Price Index (CPI) base year from 2012 to 2024 in India. The CPI tracks the prices of goods and services regularly consumed by households, reflecting inflation. The revision is necessary due to significant economic changes, urbanization, service sector expansion, and evolving digital platforms.

The updated CPI series uses the latest Household Consumption Expenditure Survey of 2023-24. Weightage is adjusted for different goods and services based on changing spending patterns. Data collection has been upgraded to include online prices and official government data.

The revised CPI aims to align with international standards while retaining India-specific features. The Ministry of Statistics and Programme Implementation (MoSPI) has engaged with experts and stakeholders to ensure transparency and methodological soundness.

Key Facts

The CPI tracks the prices of goods and services regularly consumed by households.

The CPI base year is being updated from 2012 to 2024.

The updated CPI series uses the latest Household Consumption Expenditure Survey of 2023-24.

Weightage is adjusted for different goods and services to reflect current spending patterns.

The revised CPI incorporates online prices for items such as telecom services and airfares.

The CPI draws more on official data from government sources.

UPSC Exam Angles

GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

Connects to syllabus topics on inflation, economic indicators, and government policy

Potential question types: Statement-based, analytical questions on the impact of CPI revision

Visual Insights

Key Updates in CPI Base Revision

Highlights of the ongoing CPI base year revision from 2012 to 2024, reflecting India's evolving consumption patterns.

New CPI Base Year: 2024
Previous CPI Base Year: 2012
Data Source: HCES 2023-24

More Information

Background

The Consumer Price Index (CPI) is a crucial economic indicator that measures changes in the price level of a basket of goods and services consumed by households. Its origins can be traced back to the need for a reliable measure of inflation to inform economic policy decisions. The concept of a price index gained prominence in the early 20th century, with various countries developing their own methodologies. Over time, the CPI has evolved to reflect changes in consumption patterns and technological advancements. The base year for CPI is periodically revised to ensure that the index accurately represents the current spending habits of consumers. These revisions involve updating the basket of goods and services, adjusting the weights assigned to different items, and incorporating new data sources. The Ministry of Statistics and Programme Implementation (MoSPI) plays a key role in this process. The legal and constitutional framework for economic statistics in India is underpinned by the Collection of Statistics Act, 2008, which provides the framework for collecting statistical data. The CPI is used extensively in India for various purposes, including adjusting wages and salaries, calculating dearness allowance for government employees, and informing monetary policy decisions by the Reserve Bank of India (RBI). The accuracy and reliability of the CPI are therefore of paramount importance.

Latest Developments

Recent government initiatives have focused on improving the quality and timeliness of economic data. The use of digital platforms for data collection has been expanded to capture online prices and transactions more effectively. The National Statistical Office (NSO) is working to enhance data analytics capabilities and improve the dissemination of statistical information to the public. There are ongoing debates about the appropriate methodology for calculating the CPI, particularly regarding the treatment of housing costs and the inclusion of new goods and services. Different stakeholder perspectives, including those of economists, policymakers, and consumer groups, are taken into account during the revision process. The RBI closely monitors CPI trends to make informed decisions about interest rates and monetary policy. The future outlook for CPI revisions involves further integration of technology and data analytics to improve accuracy and efficiency. The government aims to align India's CPI methodology with international standards while retaining India-specific features. Upcoming milestones include the release of the revised CPI series based on the 2024 base year and the ongoing assessment of its impact on economic indicators.

Frequently Asked Questions

1. What is the Consumer Price Index (CPI) and why is its base year revision important?

The Consumer Price Index (CPI) tracks the prices of goods and services regularly consumed by households and is a key measure of inflation. Revising the base year is important because consumption patterns change over time due to economic shifts, urbanization, and technological advancements. A revised base year ensures the CPI accurately reflects current spending habits.

2. What are the key changes in the CPI base year revision from 2012 to 2024?

The key changes include using the Household Consumption Expenditure Survey of 2023-24, adjusting the weightage of different goods and services to reflect current spending patterns, and incorporating online prices for items like telecom services and airfares.

3. How does the CPI base revision impact the common citizen?

The revised CPI will provide a more accurate picture of inflation, which affects the cost of living. This can influence government policies related to wages, pensions, and social welfare programs. If the CPI accurately reflects the prices people are paying, it can lead to better-targeted support and policies.

4. What is the role of the Ministry of Statistics and Programme Implementation (MoSPI) in the CPI revision?

The Ministry of Statistics and Programme Implementation (MoSPI) is responsible for overseeing the entire CPI revision process. This includes conducting the Household Consumption Expenditure Survey, analyzing the data, updating the weightage of goods and services, and disseminating the revised CPI to the public.

5. Why is the Household Consumption Expenditure Survey of 2023-24 important for the CPI revision?

The Household Consumption Expenditure Survey of 2023-24 provides the most recent data on how households are spending their money. This data is crucial for updating the weightage of different goods and services in the CPI basket, ensuring that the index reflects current consumption patterns.

6. What are the recent developments related to the CPI base revision?

Recent developments include the use of digital platforms for data collection to capture online prices and transactions more effectively. The National Statistical Office (NSO) is working to enhance data analytics capabilities and improve the dissemination of statistical information to the public.

7. How does the revised CPI align with international standards?

The revised CPI aims to align with international standards while retaining India-specific features. This involves adopting best practices in data collection, weightage adjustment, and index calculation to ensure comparability with other countries' inflation measures.

8. What are the potential challenges in implementing the revised CPI?

Potential challenges include ensuring accurate and timely data collection, addressing regional variations in consumption patterns, and effectively communicating the changes to the public. It is also important to maintain the credibility and transparency of the CPI to ensure public trust.

9. What are the key dates to remember related to the CPI base revision?

The key dates to remember are 2012, the previous CPI base year, and 2024, the new CPI base year. Also, 2023-24 is the year of the Household Consumption Expenditure Survey used for the revision.

10. Why is the CPI revision in the news recently?

The CPI revision is in the news because the government is actively working on updating the base year to reflect the changing economic landscape and consumption patterns in India. This is a significant step towards ensuring that economic statistics accurately represent the current reality.

Practice Questions (MCQs)

1. Consider the following statements regarding the Consumer Price Index (CPI) in India: 1. The CPI measures changes in the price level of a basket of goods and services consumed by households. 2. The Ministry of Finance is responsible for revising the base year of the CPI. 3. The updated CPI series uses the latest Household Consumption Expenditure Survey of 2023-24. Which of the statements given above is/are correct?

A.1 and 2 only
B.1 and 3 only
C.2 and 3 only
D.1, 2 and 3

Show Answer

Answer: B

Statement 1 is CORRECT: The CPI indeed measures changes in the price level of goods and services consumed by households, reflecting inflation. Statement 2 is INCORRECT: The Ministry of Statistics and Programme Implementation (MoSPI), not the Ministry of Finance, is responsible for revising the base year of the CPI. Statement 3 is CORRECT: The article explicitly states that the updated CPI series uses the latest Household Consumption Expenditure Survey of 2023-24.