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Ministry of Statistics and Programme Implementation (MoSPI) | National Statistical Office (NSO) | Reserve Bank of India (RBI)
The Expert Group (EG), chaired by Shri Ashish Kumar, has recommended a comprehensive modernization of the Consumer Price Index (CPI), officially shifting the base year to 2024=100. This revision marks the first major update since the 2012 series and aligns India’s inflation measurement with international best practices prescribed by the IMF. To ensure global comparability, the EG has adopted the COICOP 2018 (Classification of Individual Consumption According to Purpose) framework, expanding the hierarchical structure to 12 Divisions, 43 Groups, 92 Classes, and 162 Sub-classes.
Expanded Market Coverage and Item Basket
The new series significantly broadens the scope of data collection to reflect rapid urbanization and changing consumption patterns:
Market Expansion: The number of rural markets will increase from 1,181 to 1,465, and urban markets from 1,114 to 1,395 across 434 towns.
Item Basket: The total number of weighted items in the All-India basket has increased from 299 to 358, with goods increasing to 308 and services to 50.
Digital Transformation: For the first time, 12 online markets have been added to capture price variations on e-commerce platforms, reflecting that online expenditure now accounts for 10.5% of urban household spending.
Data Collection: Price collection has transitioned from “pen and paper” to a tablet-based CAPI (Computer Assisted Personal Interviewing) system, featuring real-time validation and geospatial tracking.
Methodological Refinements
The report introduces critical changes to how indices are calculated and processed:
Elementary Indices: The EG recommended adopting the Jevons short index (chain-base) formula instead of the long index method, which reduces dependency on fixed base prices and improves quality adjustment handling.
Treatment of Free Items: In accordance with basic CPI principles, the EG decided not to include free social transfers (such as free food grains under PMGKAY or free electricity) in the index, as these involve no monetary expenditure by households.
Housing and Utilities: The House Rent Index will now be compiled for both rural and urban sectors using a revised formula to address month-over-month volatility. Electricity charges will be captured across four specific consumption slabs (100, 200, 300, and 400 units) directly from State DISCOMs.
Administrative Items: Centrally determined prices for rail fares, fuel, and postal services will be sourced directly from the respective Ministries on a monthly basis to ensure near-complete enumeration.
What is the “Weight Reference Period” and how does it differ from the “Price Reference Period” in the new series? The Weight Reference Period (2023-24) is the duration during which the Household Consumption Expenditure Survey (HCES) data was collected to determine the importance (weights) of various items in the basket. The Price Reference Period (2024) is the year in which base prices were collected to serve as the 100-mark for the index. The EG synchronized these periods as closely as possible to satisfy the requirements of the Modified Laspeyres (Young) index formula, ensuring that the CPI accurately reflects contemporary spending patterns.
Policy Relevance
The comprehensive update of the statistical framework is vital for evidence-based economic management by the Ministry of Finance and the RBI.
Enhanced Monetary Policy Accuracy: By adopting COICOP 2018 and the Jevons short index, the RBI will have a more granular and stable indicator for its Flexible Inflation Targeting mandate.
Fiscal and Budgetary Planning: The inclusion of online markets and the exclusion of free social transfers provides a clearer picture of private consumption demand, essential for calculating the GDP deflator and adjusting tax brackets.
Structural Representation: The shift to district-level strata for surveys and the expansion of the services basket ensures that policy interventions can be targeted toward the informal sector and regional disparities more effectively.
Follow the full news here: Expert Group Report on CPI January 2026