CPI Base Year Revised to 2024 — Inflation Measurement & Methodological Changes

Why was the CPI Base Year revised from 2012 to 2024?

The Ministry of Statistics and Programme Implementation (MoSPI) revised the Consumer Price Index base year to 2024 to reflect updated consumption patterns, changing price structures, urbanisation, expansion of services and rapid digitalisation of household spending.

Which ministry revised the Consumer Price Index (CPI) Base Year to 2024?

The Ministry of Statistics and Programme Implementation (MoSPI) revised the CPI Base Year to 2024.

What was the previous CPI base year replaced by the 2024 base year?

The previous CPI base year was 2012, which was replaced by 2024.

What does the Consumer Price Index (CPI) measure?

CPI measures the average change over time in the retail prices of goods and services consumed by households and is a major measure of inflation experienced by consumers.

Why is CPI important for monetary policy?

CPI is the main indicator used by the Reserve Bank of India for monetary policy decisions, including decisions relating to inflation targeting and policy rates.

What are some administrative uses of CPI?

CPI is used for purposes such as calculating Dearness Allowance, revising wages, pension adjustments and policy formulation.

What was India's overall CPI inflation rate in January 2026 according to the chapter?

India's overall CPI inflation rate in January 2026 was 2.75% year-on-year, with rural inflation at 2.73% and urban inflation at 2.77%.

Who chaired the 26-member Advisory Committee on National Accounts Statistics associated with the base-year revision exercise?

Biswanath (Biswanath) Goldar chaired the 26-member Advisory Committee on National Accounts Statistics that decided the GDP base year for the revised series.

What GDP and IIP base years were identified alongside the CPI revision exercise?

FY 2022–23 was identified as the revised base year for GDP, while FY 2022–23 was also identified as the new base year for the Index of Industrial Production (IIP).

Which household expenditure data was used to identify the new CPI 2024 base year?

The 2023–24 Household Consumer Expenditure Survey data was used to identify the new CPI 2024 base year.

What is a base year in the context of economic indices?

A base year is a benchmark reference point against which economic indicators, price changes and structural trends are compared; it helps remove the effect of inflation and facilitates meaningful comparison over time.

Why does a base year need periodic revision?

A base year needs periodic revision because consumption patterns, income levels, lifestyles, economic structure and relative prices change over time; an outdated basket can therefore misrepresent the actual price experience of households.

What major structural changes in India since 2012 supported the CPI base-year revision?

India experienced greater urbanisation, expansion of the services sector and rapid digitalisation of consumer spending, along with rising incomes and changing household expenditure patterns.

How can rising incomes affect the CPI consumption basket?

Rising incomes can diversify household expenditure patterns, causing consumers to spend differently from the pattern reflected in an older CPI basket.

What risk arises if the inflation index is not periodically revised?

An outdated inflation index can misrepresent the actual price rise experienced by households, reducing the accuracy, credibility and policy usefulness of inflation measurement.

What formula is used for compiling the revised CPI 2024?

The revised CPI 2024 is compiled using the Laspeyres Index Formula, based on base-year prices, base-year weights and current prices.

What were the main changes introduced in the CPI 2024 basket?

The revised basket added items such as OTT subscriptions, rural house rent, value-added dairy products, pen drives, babysitting services, fitness equipment and barley products, while removing outdated items such as VCR/VCD/DVD players, tape recorders, radios and cassettes.

Which entertainment-related item was newly added to the CPI 2024 basket?

OTT subscriptions were newly added to the CPI 2024 basket, reflecting changing consumer behaviour and the growth of digital entertainment.

Which housing-related item was newly added to the CPI 2024 basket?

Rural house rent was newly added to the CPI 2024 basket.

Which dairy-related category was newly added to the CPI 2024 basket?

Value-added dairy products were newly added to the CPI 2024 basket.

Which childcare/service item was newly added to the CPI 2024 basket?

Babysitting services were newly added to the CPI 2024 basket.

Which fitness-related item was newly added to the CPI 2024 basket?

Fitness equipment was newly added to the CPI 2024 basket.

Which food-related item was newly added to the CPI 2024 basket?

Barley products were newly added to the CPI 2024 basket.

Which outdated electronic and media items were removed from the CPI basket?

VCR/VCD/DVD players, tape recorders, radios and cassettes were removed from the CPI basket because their consumption has declined and they no longer adequately represent current household spending patterns.

How many items and services were covered under the CPI 2012 and CPI 2024 baskets?

The CPI 2012 basket covered 299 items, including 40 services, whereas the CPI 2024 basket covers 358 items, including 50 services.

How has coverage of online markets changed under CPI 2024?

Online markets were not covered under CPI 2012, whereas CPI 2024 covers 12 online markets in cities with populations above 25 lakh.

How has data classification changed between CPI 2012 and CPI 2024?

CPI 2012 used groups and subgroups broadly aligned with the Classification of Individual Consumption According to Purpose (COICOP) 1999, whereas CPI 2024 uses divisions, groups and classes broadly aligned with COICOP 2018.

How has house-rent index compilation changed under CPI 2024?

CPI 2012 covered only urban areas excluding employer-provided accommodation, whereas CPI 2024 covers both urban and rural areas and also accounts for employer-provided accommodation.

How has CPI data dissemination at the State level changed under the 2024 revision?

CPI 2012 provided only a combined index at the State level, whereas CPI 2024 provides separate rural, urban and combined indices along with inflation data.

What happened to the food and beverages weight in the CPI basket after the 2024 revision?

The food and beverages weight declined from 45.86% under CPI 2012 to 36.75% under CPI 2024, reflecting changes in household consumption patterns.

Why did the expansion of the services sector support the CPI base-year revision?

The expansion of the services sector reflects a structural transformation in how households spend their income, making it necessary for the CPI basket to better capture contemporary services consumption.

What is headline inflation?

Headline inflation measures the overall rise in prices across the CPI basket, including food and fuel and other categories.

What is core inflation?

Core inflation measures inflation after excluding volatile food and fuel components, helping assess underlying and more persistent price pressures.

What is the current inflation target under India's flexible inflation-targeting framework?

India's inflation target is 4%, with a tolerance band of ±2%, meaning the target range is 2% to 6%.

Which committee formalised inflation targeting in India?

The Urjit Patel Committee formalised the framework for inflation targeting in India, with a 4% CPI inflation target and a tolerance band of ±2%.

What are the main differences between CPI, WPI and GDP Deflator?

CPI measures retail prices of goods and services consumed by households; WPI measures changes in wholesale prices of goods; and the GDP Deflator compares the value of domestically produced final goods and services at current prices with their value at base-year prices.

What is the base year of the Consumer Food Price Index (CFPI) shown in the chapter?

The Consumer Food Price Index has 2012 as its base year and measures changes in retail prices of food products.

Who releases the Consumer Food Price Index (CFPI)?

The Consumer Food Price Index is released by the National Statistical Office (NSO).

What is the base year of the Wholesale Price Index (WPI) shown in the chapter?

The WPI has 2011–12 as its base year.

Who releases the Wholesale Price Index (WPI)?

The Wholesale Price Index is released by the Office of the Economic Adviser under the Ministry of Commerce and Industry.

What does WPI primarily measure?

WPI measures average changes in wholesale prices of goods and primarily covers goods rather than household-consumed services.

What are the major commodity groups and their weights under WPI?

Manufactured products carry 64.23%, primary articles carry 22.62%, and fuel and power carry 13.15% in the WPI basket.

What is the GDP Deflator?

The GDP Deflator is an implicit price index that compares the value of domestically produced final goods and services at current prices with their value at base-year prices, thereby capturing price changes across the economy.

How does CPI differ from WPI regarding imported items and capital goods?

CPI focuses on goods and services consumed by households and does not include capital goods, whereas WPI includes capital goods and imported items as part of its broader wholesale-price coverage.

How does CPI differ from WPI regarding indirect taxes and services?

CPI includes indirect taxes and covers consumer services, whereas WPI excludes indirect taxes in the price measure and has limited or no comparable coverage of consumer services.

Which CPI category had the largest weight under the older CPI basket shown in the chapter?

Food and beverages had the largest weight under the older CPI basket shown, at 45.9% approximately, followed by miscellaneous items at 28.3%, housing at 10.1%, fuel and light at 6.8%, clothing and footwear at 6.53%, and pan, tobacco and intoxicants at 2.38%.

What are the base years and compiling agencies for the major CPI variants shown in the chapter?

CPI for Agricultural Labourers and CPI for Rural Labourers use 1986–87 as their base year and are compiled by the Labour Bureau; CPI for Industrial Workers uses 2011 as its base year and is compiled by the Labour Bureau; CPI for Rural/Urban/Combined is based on 2012 and is released by the National Statistical Office.

What was the major objective behind adding online markets to CPI 2024?

Online-market coverage was added to capture the growing importance of digital consumption and make CPI more representative of contemporary household spending.

What is the significance of revising the CPI base year for monetary policy and economic policy?

Revision improves the reflection of the actual cost of living, strengthens monetary-policy transmission and inflation measurement, improves the basis for income and social-security adjustments, and enhances the statistical credibility of economic data.

Why is the Laspeyres formula important in the CPI 2024 revision?

The Laspeyres formula uses base-year quantities or weights to compare the cost of a representative basket at current prices with its cost in the base period, allowing changes in the price level to be measured consistently.

What revised base year was identified for the new GDP and IIP series?

FY 2022–23 was identified as the revised base year for the new GDP series and the Index of Industrial Production (IIP).

What is the main purpose of a base year when calculating Real GDP?

The base year provides a benchmark for comparing economic output at constant prices and helps remove the effect of price changes, allowing real changes in production to be measured.