The combined weight of ‘food and beverages’ would reduce to about 41% in the new Consumer Price Index (CPI) series, if the government takes into account the results of the latest household consumption expenditure survey (HCES) only, an official source privy to the matter told FE.
In the current CPI series, with base year 2012, ‘food and beverages’ carry a weight of 45.9%. The group in the rural CPI index carries a weight 54.2% and in the urban, 36.3%.
The source, however, said that the CPI series would likely be revamped only after the second round of the HCES is concluded. The statistics ministry is conducting another round of the survey to reverify the accuracy of the consumption expenditure data.
The 2022-23 survey might have reflected the pent-up demand, as it was the year immediately after all the COVID-19 linked restrictions were lifted. So the results of the 2023-24 survey are likely to give the true picture of households’ expenditure, the source said. “Most likely, by the end of 2025 or early 2026, the new CPI series will be introduced,” the person added.
As per the fact sheet of the HCES 2022-23, the decline in the share of food items in the consumption basket of rural and urban households in the last 11 years was lower than widely expected.
The food’s share in the average monthly per capita consumption expenditure (MPCE) for rural households decreased to 46.4% in 2022-23 from 52.9% in 2011-12, the immediate past year for which survey results are available, while that of urban households declined to 39.2% from 42.6%.
Several economists had earlier expected the food’s share in the consumption basket to fall around 35-36% at the aggregate level, but as per the current data, it’s around 40-41%.
The revamp of the CPI series is essential to track the accurate level and source of price pressures in the economy. The current CPI series don’t constitute several items and services that are consumed widely by households, say economists.