CPI base year revision may push overall inflation up by 20-30 bps: SBI report

NEW DELHI: After the revision of the Consumer Price Index (CPI) base year, overall CPI inflation is expected to rise marginally by 20-30 basis points (bps), according to a report by SBI Ecowrap. The report stated that applying the new weights to the unchanged index results in a marginal increase of approximately 20-30 bps in overall inflation.

However, it also highlighted that in months when food inflation is higher, the new CPI could be 20-30 bps lower than the earlier series. It stated, “By considering the new weights on unchanged index, we have calculated New CPI with old indices and found that overall CPI will increase marginally by 20-30 bps”.

The findings come in the backdrop of the revision of the CPI base year to 2023-24 from 2011-12. To ensure a more accurate CPI measurement that reflects changing household consumption behaviour and incorporates global best practices and methodological developments, the Ministry of Statistics and Programme Implementation (MOSPI) had constituted an expert group. The recommendations of this expert group were released on Thursday.

According to the report, the expert group has detailed the entire process followed for the base revision exercise. It also outlined the enhancements and modifications introduced in the new CPI series, referred to as CPI 2024, along with comprehensive recommendations.

The new CPI 2024 series will consist of 358 weighted items. These items are mapped across 12 Divisions, 43 Groups, 62 Classes and 192 Sub-classes. The report further noted that the first CPI 2024 data release will take place on February 12, 2026. This release will include index data starting from January 2025 onwards and inflation data for January 2026.

In addition, the All-India level back series for Rural, Urban and Combined sectors, starting from January 2013, will also be released on the same date. The revision has also led to notable changes in the CPI’s weight structure at the All-India (Combined) level.

Under the old 2012 series, the weight of food and beverages stood at 45.86, which has now been reduced to 36.75 in the new 2024 series. Housing, water, electricity, gas and other fuels saw an increase in weight from 16.91 to 17.66, while transport, information and communication rose sharply from 8.59 to 12.41.

Other categories such as health increased from 5.89 to 6.10, furnishings and household maintenance from 3.80 to 4.47, and personal care, social protection and miscellaneous goods and services from 3.89 to 5.04. The report noted that these changes reflect evolving consumption patterns and are expected to improve the accuracy of inflation measurement going forward. (ANI)