CPI Revision: What's Changed And Why It Matters? An Explainer

The Indian government has introduced a revised Consumer Price Index (CPI) with 2024 as the new baseline, reflecting significant changes in economic measurement. This revision reduces the weightage of food items in the index, emphasizing the growing importance of services, housing, and the digital economy. The shift comes in response to evolving consumption patterns and aims to provide a more accurate representation of inflation as it affects consumers today. By reallocating weight towards sectors that have seen increased spending, the new CPI is expected to better guide monetary policy and economic planning. This move is particularly crucial as India grapples with various economic challenges, including fluctuating food prices and the rising cost of living. The updated index will also help in more effectively addressing the needs of the country's diverse population, especially as urbanization continues to rise. Overall, this CPI revision is a strategic step towards modernizing India's economic indicators to reflect current realities.