The Hindu Editorial Analysis
12 February 2026
The CPI base revision exercise measures a slice of life
(Source – The Hindu, International Edition, Page no.-10 )
Topic: GS Paper 3 – Indian Economy
Context
Inflation is one of the most closely tracked macroeconomic indicators because it directly affects household budgets and economic policy decisions. The Consumer Price Index (CPI) measures changes in the prices of goods and services consumed by households. India is currently revising the CPI base year from 2012 to 2024 to better reflect evolving consumption patterns, technological shifts, and structural economic changes.
This revision is not merely statistical; it ensures that inflation measurement mirrors real-life spending patterns.
Why CPI Matters
- Household Impact
- Tracks cost of essentials: food, rent, fuel, transport, services.
- Influences wage revisions, pensions, and social security adjustments.
- Monetary Policy Anchor
- CPI-based inflation is the primary target for the Reserve Bank of India (RBI).
- Guides interest rate decisions under India’s inflation targeting framework.
- Policy Responsiveness
- Accurate inflation measurement ensures policies respond to actual price pressures experienced by households.
Why a Base Revision is Necessary
Since the last base revision (2012), the Indian economy has changed significantly:
- Rapid urbanisation
- Expansion of the services sector
- Growth of digital platforms
- Diversified household expenditure patterns
- Rising online purchases
- Shift towards telecom, air travel, digital services
An outdated base year fails to reflect contemporary consumption realities.
Key Features of the 2024 CPI Revision
1. Updated Consumption Basket
- Based on the Household Consumption Expenditure Survey (HCES) 2023-24.
- Greater weight to items on which households now spend more.
- Reduced weight to items with declining expenditure share.
- Inclusion of emerging services and changing lifestyle items.
This ensures CPI better captures actual household budgets.
2. Revised Weight Structure
- Reflects rising spending on services.
- Accounts for lifestyle changes due to rising incomes.
- Makes inflation measurement more representative.
3. Methodological Improvements
- Alignment with international statistical standards.
- Easier comparison of India’s inflation with global peers.
- Improved calculation methods without losing India-specific features.
4. Digital and Administrative Data Integration
- Inclusion of online price data (e.g., telecom services, airfares).
- Use of government administrative records (fuel prices, postal charges, PDS data).
- Reduction in dependence solely on traditional market surveys.
This integration reduces manual errors and enhances real-time data validation.
A Wider and Stronger Database
The new CPI series incorporates:
- Computer-assisted price collection
- Real-time checks
- Integration of survey data + administrative records + digital price sources
This reduces sampling biases and improves reliability.
Quality and timeliness are crucial because CPI affects:
- Loan EMIs
- Savings returns
- Wage negotiations
- Government borrowing costs
Institutional Effort
The base revision involved:
- Coordination across statistical divisions
- Consultation with economists and domain experts
- Testing of alternative methodologies
- Transparency in revision processes
The Ministry of Statistics and Programme Implementation (MoSPI) has aimed to ensure the revised index is methodologically sound and publicly credible.
Why Continuity Matters
Even with revisions:
- The CPI retains comparability over time.
- The objective remains consistent: measuring price changes from a household perspective.
- Improvements do not disconnect the index from lived realities.
Statistical reform must balance innovation with continuity.
Broader Significance
- Improved Inflation Targeting
More accurate data strengthens RBI’s policy precision. - Better Fiscal Planning
Welfare schemes and index-linked benefits rely on CPI. - Public Trust in Data
Transparent statistical updates reinforce institutional credibility. - International Comparability
Aligning with global standards enhances India’s statistical standing.
Conclusion
The CPI base revision is not just a technical recalibration; it is a recalibration of how we measure daily life. Behind every inflation statistic lies the lived experience of millions. By updating the basket, weights, and data sources, India ensures that inflation measurement reflects contemporary realities while maintaining continuity and credibility.
A robust CPI strengthens monetary policy, supports informed governance, and ensures that economic statistics remain rooted in people’s lives rather than outdated assumptions.