New Delhi, Feb 13 (NationPress) Following the unveiling of the Consumer Price Index (CPI) series with a base year of 2024, Chief Economic Advisor (CEA) V. Anantha Nageswaran stated that this adjustment provides a more accurate representation of household expenditure patterns. The revised index enhances the precision of poverty estimates and highlights trends in income growth and productivity improvements.

The updated CPI series indicates a surge in service consumption, as the proportion of food expenditure in household budgets decreases. Nageswaran emphasized that this refined data will assist fiscal and monetary policymakers in crafting more effective responses to changing economic landscapes.

According to the CEA, the new series effectively captures the shift in household budgets from food to services, such as health care, education, mobility, and connectivity, which typically correlates with rising income and productivity levels.

As for the inflation landscape, the all-India CPI inflation rate for January was recorded at 2.75 percent (year-on-year), with rural inflation at 2.73 percent and urban inflation at 2.77 percent. Notably, food inflation, which had been in negative territory until December 2025 under the previous series, now stands at 2.1 percent in the new series.

Nageswaran remarked that the monetary policy response may become more concentrated on aggregate demand pressures rather than addressing supply-induced inflation through demand-sensitive variables like interest rates.

He pointed out that a reduced weight for the typically volatile food and beverage category may stabilize headline inflation.

If CPI volatility diminishes, it could lead to more stable, predictable, and reliable fiscal expenditure, such as Dearness Allowance (DA) calculations and inflation-indexed bonds tied to the CPI, thereby enhancing budget predictability.

The Ministry of Statistics and Programme Implementation (MoSPI) released the initial print of the revamped CPI series on Thursday, establishing a base year of 2024.

The prior six-group classification was expanded to 12 divisions to align with international standards, utilizing 'HCES 2023-24' for updating the household consumption basket.

The new basket now includes 358 items, an increase from 299, with goods rising to 308 and services to 50, highlighting the increasing significance of services in household consumption.

Saurabh Garg, Secretary of MoSPI, indicated that the government intends to revise the CPI base every five years, with the next household consumer expenditure survey scheduled for 2027-28.

aar/na