The Consumer Price Index (CPI) with the new base year 2024 will increase marginally by 20-30 basis points, according to an SBI Research report. The government has formed an expert group to measure CPI accurately, incorporating changing consumption behaviour of households and latest global best practices including methodological developments. As per the latest SBI Research report, when considering new weights on unchanged indices, the overall CPI will increase marginally by 20-30 bps. However, in months when food inflation is higher, the new CPI will be lower by 20-30 bps, providing a more accurate reflection of price movements. The base year has been reset to 2024, with the index value fixed at 100 for that year, replacing the older 2012 base year. The weight of food and beverages in the CPI basket has been reduced to 36.75% from 45.86%, while transport, information and communication has increased significantly to 12.41%. The base year change from 2012 to 2024 reflects current consumption patterns and makes the index more responsive to modern economic realities.
The first CPI series based on new base year 2024 will release on February 12, featuring indices data from January 2025 onwards and inflation data for January 2026. The All-India level back series for the Rural, Urban, and Combined sectors from January 2013 onwards will also be released simultaneously, providing comprehensive historical context for price movements. The updated CPI framework is aimed at offering a more accurate reading of price movements and household consumption behaviour, reflecting changes in spending habits over the past decade driven by digital services, e-commerce and evolving mobility patterns. The new CPI series covers rural housing rents for the first time and excludes employer-provided housing to prevent data distortion, improving the accuracy of housing inflation measurement.
The new CPI structure will collect price data from 1,465 rural markets and 1,395 urban markets across 434 towns, with a total of 358 weighted items in the basket. Among these items, goods will increase from 259 to 314 and services from 40 to 50 items, enhancing the comprehensive coverage of consumer price movements. The CPI 2024 basket comprises 358 weighted items mapped across 12 divisions, 43 groups, 62 classes and 192 sub-classes, aligned with the global classification of individual consumption according to purpose (COICOP) 2018 framework. This expanded coverage ensures better representation of price variations across different market segments and geographical regions. The item count has increased from 299 to 358 in the new CPI basket, reflecting the broader scope of modern consumption patterns.
To capture price movements on e-commerce platforms, 12 online markets/towns with populations exceeding 25 lakh will be added to the CPI 2024 series. Prices will be collected through online/e-commerce platforms on a weekly basis, ensuring better representation of digital commerce impacts on consumer prices. The expert group recommended tracking prices from 12 major e-commerce platforms weekly, while telecom services and OTT subscriptions will be monitored centrally using online sources. This digital integration represents a significant advancement in CPI methodology, bringing the index closer to real-time price monitoring and providing more accurate insights into the evolving retail landscape. The new CPI series includes smartphones, OTT subscriptions, and international airfare as part of the updated basket, reflecting rising digital and service-based consumption in Indian households.
Centrally determined prices for rail fare, postal services, fuel (petrol, diesel, LPG, CNG & PNG), telecom services, and online media services (OTT) will be collected by the Price Statistics Division (PSD). Airfare for international direct routes will also be incorporated into the price collection framework, with the expert group recommending tracking ticket prices based on advance purchase windows of 21 days for domestic travel and 60 days for international routes using popular routes identified by the directorate general of civil aviation (DGCA). Electricity prices will be compiled directly by state field offices, while centrally determined prices ensure standardized price collection methods and reduces regional variations in price data collection.
For gold and silver jewellery, the expert group recommended adopting an approach of defining standard jewellery items that are likely to be available consistently in the market, rather than attempting to price customised pieces. Prices of basic and simple gold and silver jewellery such as bangles, necklaces, and rings will be collected, ensuring standardized representation of jewellery prices in the CPI calculation. This standardized approach provides more reliable and comparable data for inflation calculations while maintaining the traditionally high weightage of precious metals in the CPI basket. The new series also introduces changes to housing and jewellery price tracking, with house rent indices now compiled for rural areas and employer-provided accommodation excluded from the index.
To ensure global comparability, the latest structure of Classification of Individual Consumption According to Purpose (COICOP) 2018 will be adopted in the CPI 2024 series. The expert group's report recommends systematic inclusion of online and administrative data, with prices from 12 major e-commerce platforms tracked weekly and telecom services monitored centrally using online sources. The revised CPI series will feature more granular data dissemination with item-level CPI indices released for each state and for rural, urban and combined sectors, covering all COICOP classification levels. To ensure continuity, MoSPI will publish linking factors between the CPI 2012 and CPI 2024 series, allowing users to compute back-series inflation data. The CPI structure is moving from 6 to 12 distinct Divisions, fully aligning with the UN COICOP 2018 framework, providing better classification and international compatibility.