New CPI: India is set to introduce a revised Consumer Price Index that reflects how household spending has evolved over the past decade. According to a research note by SBI Research, the recalibrated index, using 2024 as its base year, is expected to show a marginal rise of around 20 to 30 basis points overall. During periods when food prices rise sharply, the updated index may, however, register inflation readings that are lower by a similar margin, compared with the current series.

Purpose Behind the CPI Revision

The revision follows the government’s decision to constitute an expert group tasked with improving the accuracy of inflation measurement. The panel examined changes in household consumption behaviour, alongside global best practices, to modernise the methodology used for tracking price movements. The objective is to ensure that the CPI remains relevant, transparent, and aligned with international standards while better reflecting how consumers actually spend.

Timeline for Release of New Data

The first CPI series based on the 2024 base year is scheduled for release on February 12. This rollout will include index numbers beginning from January 2025 and inflation figures for January 2026. In addition, historical back-series data at the all-India level will be published for rural, urban, and combined segments, covering the period from January 2013 onwards. This will allow analysts and policymakers to compare trends over time using a consistent framework.

Expanded Market Coverage and Item Basket

Under the revised structure, price data will be gathered from a wider network of markets. Officials will collect information from 1,465 rural markets and 1,395 urban markets across 434 towns nationwide. The overall basket will include 358 weighted items, reflecting a broader and more current mix of goods and services. Notably, the number of goods tracked will rise from 259 to 314, while services will expand from 40 to 50 items, capturing the growing role of services in household budgets.

Adoption of Updated International Classification

To strengthen credibility and ensure global comparability, the CPI 2024 series will adopt the 2018 version of the Classification of Individual Consumption According to Purpose. This classification system, widely used internationally, allows consumption categories to be mapped more precisely and consistently across countries. The expert committee noted that aligning India’s CPI structure with this framework would enhance transparency and analytical usefulness.

Fresh Market Survey and Sampling Changes

As part of the overhaul, authorities will conduct a new market survey to verify rural and urban samples, identify markets and shops, and map items accurately. This exercise is intended to improve data quality at the collection stage. The report also indicated that the existing practice of maintaining reserve shops for price collection may be discontinued, streamlining the overall process.

Inclusion of Online Prices and Centralised Collection

Recognising the rapid growth of online shopping, the revised CPI will incorporate prices from e-commerce platforms. Twelve online markets located in towns with populations exceeding 2.5 million will be added, with prices collected on a weekly basis. For items with centrally determined prices, such as rail fares, postal services, and fuels including petrol, diesel, LPG, CNG, and PNG, data compilation will be handled centrally. Telecom services and online media subscriptions will also be tracked through centralised online sources.

Broader Coverage of Travel and Jewellery Prices

The new framework expands coverage to include airfare on international direct routes, reflecting the increasing relevance of overseas travel in household spending. For gold and silver jewellery, the expert group recommended focusing on standard items that are consistently available in the market. Instead of pricing customised pieces, data will be collected for simple products such as bangles, necklaces, and rings, ensuring comparability and continuity.