New CPI Explained: OTT, Online Shopping To Airfares; How India’s New Retail Inflation Formula Will Impact You?

New CPI Inflation Data: India's January consumer price index (CPI) inflation data will be released on Thursday, February 12. But this time, the CPI inflation data comes with a major change as it will include new base year, ie 2024 instead of 2012. The change, which appears to be a routine exercise, will significantly change the way inflation is calculated.
Inflation is the rise in the prices of goods and services over time.

The revamped CPI inflation formula will not just track food and fuel prices, but will also include modern-day expenses like online shopping, OTT subscriptions, and airfares. The changes could have wider implications for interest rates, EMIs and overall monetary policy.

What Is The New CPI Inflation Series?

The CPI helps in measuring inflation and consumption patterns over a period of time. The base year for CPI inflation has been revised from 2012 to 2024. This means that inflation will be measured by comparing today's prices (of general commodities and services) with prices in 2024.

As per PIB, the CPI inflation rejig will use data from the Household Consumption Expenditure Survey (HCES) 2023-24 to revise the item basket and expenditure weights so that they reflect current consumption patterns in both rural and urban India.

The revision is intended to improve the accuracy and relevance of CPI estimates, strengthen methodological transparency, and support better-informed economic policymaking.

What Will Change In The New CPI?

Apart from the revision of the base year, the new CPI also includes a reshuffling of weights across spending categories. As per a Mint report, the weight of foods and beverages in CPI basket will go down to 36.8% from 45.9%. Inflation in housing, transport, healthcare and personal services will also have greater influence on the retail inflation numbers.

New CPI Explained: OTT Subscription, Online Shopping, Airfares, More

The new CPI measurement will look beyond education, healthcare, fuel and food prices. Apart from considering these expenses, the new CPI inflation formula will also consider spending pattern linked to OTT subscriptions, online shopping, telecom plans, airfares, etc.

To consider e-commerce pricing, around 12 dedicated online markets have been added in large cities, reported Mint. Additionally, the data collection has been moved to tablet based, geo-tagged systems with built-in real time validation. The new CPI inflation will also cover a wider range of villages and urban areas.

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