Consumer Price Index: The weightage of food items can be reduced in the calculation of the new retail inflation rate data so that the rise in inflation rate can be stopped. The government has formed a panel under the Ministry of Statistics which is engaged in preparing the new Consumer Price Index. Currently, the food and beverage category has 54.2 percent weightage in the Consumer Price Index basket.
According to a Bloomberg report, currently the Consumer Price Index is prepared on the basis of the financial year 2011-12, which economists have been calling very outdated and on this basis the Central Bank Reserve Bank of India also determines its policy rates. A recent survey has revealed that most consumers are spending less on food items compared to a decade ago. The spokesperson of the Ministry of Statistics has not responded to the email sent by Bloomberg regarding information in this matter.
Due to the high weightage of food items in the Consumer Price Index basket i.e. retail inflation rate, it has a major contribution in the high inflation. In the month of June, the food inflation rate has increased to 9.36 percent due to which the retail inflation rate was 5.08 percent. Whereas excluding food and energy cost, the retail inflation rate was 3.15 percent.
At present, there are 299 items in the Consumer Price Index, which includes horse carriage fare, video cassette recorder, cost of audio and video cassettes, which may be eliminated. The panel reviewing the Consumer Price Index may include consumer electronic products, including smartphones, in the new index.
The changes being discussed on the weightage of the Consumer Price Index and its base year can be implemented only from January 2026. The CPI weightage is being reviewed on the basis of the new Consumer Spending Survey. The work of its review will be completed by 2025. Chief Economic Advisor V Anantha Nageshwaran had said last month that food items should not be included in the RBI’s inflation target. However, many economists are not in favor of separating food items from the retail inflation rate.
read this also
Affordability Index: Mumbai homebuyers spend 51% of their income on EMI payments, this is the burden on the pockets of people of Delhi NCR!
