What is Consumer Price Index (CPI)?
The Consumer Price Index (CPI) measures the average change in prices of a basket of goods and services consumed by households over time.
- It tracks the average change over time in the prices paid by consumers for a fixed basket of goods and services.Β
Who Releases CPI in India?
- Released by: National Statistical Office (NSO)
- Under: Ministry of Statistics and Programme Implementation (MoSPI)
Types of CPI in India
| Type of CPI | Releasing Authority | Purpose/Use Case |
|---|---|---|
| CPI-Combined (Rural + Urban) | NSO (MoSPI) | Headline inflation indicator for RBI’s monetary policy. |
| CPI for Industrial Workers (IW) | Labour Bureau | Used for Dearness Allowance (DA) revision for govt employees. |
| CPI for Agricultural Labourers (AL) | Labour Bureau | Used for wage fixation under MGNREGA and state minimum wages. |
| CPI for Rural Labourers (RL) | Labour Bureau | Measures price changes faced by rural labour households. |
Recent changes in CPI
- Ministry of Statistics and Programme Implementation (MoSPI) has revised the base year for the CPI series from 2012 toΒ 2024
- Weight Source: Based on theΒ Household Consumption Expenditure Survey (HCES) 2023-24.
- Expanded Basket: The number of weighted items increased from 299 toΒ 358Β (308 goods and 50 services).
- New Items: Included modern services likeΒ OTT streaming, e-commerce, andΒ rural house rentΒ for the first time.
- Weightage Shift: The weight ofΒ Food and BeveragesΒ has been reduced from approximately 45.86% toΒ 36.75%, reflecting its decreasing share in modern household budgets
Other facts related to CPI:
- Headline Inflation: Measured byΒ CPI-Combined (Rural + Urban), it is the primary indicator used by theΒ Reserve Bank of India (RBI)Β for monetary policy and inflation targeting (target:Β 4% Β± 2%).
- Core Inflation: Headline inflation minus the volatile components (Food and Fuel).
- Calculation Method: Uses theΒ Laspeyres Index Formula
CPI vs. WPI
- Scope: CPI covers bothΒ goods and services, while WPI (Wholesale Price Index) coversΒ only goods.
- Price Level: CPI measures retail prices (consumer perspective); WPI measures wholesale prices (producer/bulk perspective).
- Weights: Food has a significantlyΒ higher weightageΒ in CPI (over 36%) compared to WPI (~24%)
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