New CPI series to improve quality of data used in formulating monetary, fiscal policies: CEA

13 Feb 2026 Evaluate

After the government released the new Consumer Price Index (CPI) series with base 2024=100 instead of 2012=100, Chief Economic Advisor (CEA) V Anantha Nageswaran has said the new series will improve the quality of data used in formulating monetary and fiscal policies. The new series has captured more goods and services items, and excluded those which are not consumed presently. He said ‘Since the CPI basket is now aligned with recent expenditure data, the inflation signals derived from this will be more closely matched with the economic conditions. This improves the information basis for calibrating monetary and fiscal policy’. He said that the new series, with wider coverage of services and digital markets, provides policymakers with a more up-to-date basis for assessing real incomes, consumption trends, and purchasing power.

The Reserve Bank of India (RBI) factors in the retail inflation while arriving at its bi-monthly monetary policy decision. He said if CPI volatility declines, fiscal expenditure, DA fixation, and index bonds, which are linked to CPI, would become more stable, predictable and reliable. He said the proportion of weights assigned to the food basket has come down from 45.86 in CPI 2012 to 36.75 in the new series. It also reflects the reallocation of certain items to other categories, such as restaurants and services.

He said ‘At the macro level, this reflects a progressive diversification of expenditure towards health, education, mobility, and connectivity, which is what you would expect to see from an economy which is seeing rising incomes and rising living standards’. He added that lower weightage for the otherwise volatile group of food and beverages may make the headline inflation also less volatile. He said such rebalancing is typically associated with income growth, productivity gains, and improving living standards. He added the revised basket also highlights the increasing role of services in consumption. He noted that the new series also recognises the growing role of digital channels in price formation and would help in better distinguishing urban and rural dynamics of inflation at the state level, and the subclass as well as item level.

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