Background of the CPI Revision
Report on Comprehensive Updation of Consumer Price Index: The Report of the Expert Group on Comprehensive Updation of the Consumer Price Index was released in January 2026. The Expert Group was constituted to examine the need for revising the CPI base year and methodology.
The outcome of this exercise is the introduction of a new CPI series with base year 2024, replacing the earlier structure. The revision aims to ensure that inflation measurement reflects current consumption patterns. Rapid changes in lifestyles, services usage, and digital consumption necessitated this update.
Understanding the Consumer Price Index
The Consumer Price Index measures changes over time in retail prices of selected goods and services. These items represent what households actually purchase for daily consumption. CPI is therefore considered the most household-centric inflation indicator.
Static GK fact: CPI in India is published separately for rural, urban, and combined populations to capture regional consumption differences.
Compilation and Coverage of CPI
CPI is compiled every month by the Ministry of Statistics and Programme Implementation. Price data is collected from markets spread across rural and urban regions. The index reflects price movement in categories such as food, fuel, clothing, housing, and services.
The CPI 2024 series expands coverage of services and non-food items, reflecting urbanisation and changing demand. This improves the representativeness of the inflation basket.
Methodology Used in CPI Calculation
For CPI compilation, the Laspeyres Index Formula is used. This formula compares current prices with base year prices using fixed weights. The three key components are base year prices, base year weights, and current month prices.
Static GK Tip: Laspeyres index is widely used globally because it requires less frequent weight revision compared to other index formulas.
The Expert Group reviewed the suitability of weights to match present consumption trends. Outdated items were removed and new consumption categories were added.
Key Enhancements in CPI 2024 Series
The CPI 2024 series introduces updated item baskets and revised weights. Greater importance is given to services like education, healthcare, and transport. Digital and modern consumption habits are better represented.
The revision also improves price data collection techniques and regional representation. This leads to more accurate inflation estimation.
Uses and Policy Significance of CPI
CPI is the primary inflation indicator used by the Reserve Bank of India. It guides decisions related to monetary policy, including repo rate adjustments. A higher CPI inflation often signals tighter monetary measures.
CPI is also used as a deflator to convert nominal GDP into real GDP. It plays a role in indexation of wages, pensions, and social security payments.
Static GK fact: Inflation targeting in India is officially anchored to CPI inflation rather than WPI.
Static Usthadian Current Affairs Table
Report on Comprehensive Updation of Consumer Price Index:
| Topic | Detail |
| Report Name | Expert Group Report on Comprehensive Updation of CPI |
| New CPI Series | CPI 2024 |
| Released In | January 2026 |
| Compiling Authority | Ministry of Statistics and Programme Implementation |
| Frequency | Monthly |
| Sectors Covered | Rural, Urban, Combined |
| Formula Used | Laspeyres Index Formula |
| Policy Use | Monetary policy, GDP deflation, wage indexation |
| Inflation Indicator | Primary measure for RBI |
| Key Change | Updated basket and revised weights |
