Inside India’s New CPI Series: Basket Revision and Methodology

India’s Consumer Price Index is being rebased to 2024 from the 2012 series. This update reflects more than a decade of structural change in the economy — rising services consumption, digitalisation, the introduction of goods and services tax — as well as the obsolescence of weights derived from 2011–12 consumption data. In line with international best practice, the Ministry of Statistics and Programme Implementation convened an Expert Group to overhaul the CPI. The group recommended a new base year of 2024 and a comprehensive recalibration of the index, covering the basket, weights, and compilation methods, to better reflect current consumption patterns. 

The revision draws on the latest Household Consumption Expenditure Survey for 2023–24, which provides up‐to‐date expenditure shares. International guidelines, including those of the ILO, recommend updating CPI weights at least every five years, and many countries now refresh their baskets even more frequently. The United Kingdom reviews CPI items and weights annually, while the United States has shifted to annual updates of CPI expenditure weights after decades of less frequent revisions. India’s rebasing marks its first major CPI overhaul in more than a decade and is similar in spirit to recent basket adjustments in the UK, the US, South Africa, and New Zealand. 

Data Sources and Basket Revision
The CPI basket and weights are now derived from the Household Consumption Expenditure Survey for 2023-24, replacing the reliance on the 2011–12 survey. Weights represent the share of household spending on each item and are computed separately for rural and urban sectors. Accordingly, MoSPI will continue to publish rural, urban, and combined CPI series, with weights reflecting their respective monthly per capita expenditure shares. 
For example, “food & beverages” accounts for 23.27% of the rural CPI and 13.49% of the urban CPI, with a combined CPI weight of 36.75%, sharply lower than the 45.86% in the old series. The breadth of the basket has also expanded, from 299 weighted items in 2012 to 358 in CPI 2024. These are classified under the COICOP 2018 framework, spanning 12 divisions, 43 groups, 62 classes, and 192 subclasses, improving international comparability.
The Expert Group mapped all consumption expenditure categories to CPI items under COICOP 2018. New items were added to capture emerging goods and services, such as rural house rent, CNG/PNG for vehicles, subscription-based digital services and electronics, while obsolete items were dropped. At the all-India level, the number of goods items rose from 259 to 308 and services from 40 to 50.  While item counts themselves do not determine index influence, the revised weights reflect the growing role of services in household spending.
At higher levels, CPI uses fixed base-year weights, consistent with an overall Laspeyres framework. Rural and urban weights are derived from the monthly per capita expenditure shares, and the combined weights are calculated as population‐weighted averages of the rural and urban weights. Thus, for instance, “food & beverages” carries a combined weight of 36.75%, while “housing (water, electricity, fuels)” rises to 17.66% (6.52% rural, 11.15% urban), reflecting the inclusion of rural rents as well as higher measured housing and utility expenditure.
Index Construction Methodology
India’s CPI is compiled in a bottom-up, Laspeyres framework. Prices are collected monthly by MoSPI field officers from a large sample of markets — currently 1,181 rural and 1,114 urban centres. For each elementary item, price quotes are collected across sampled markets and outlets.
At the elementary level, the CPI uses the Jevons (geometric mean) formula to compute price indices from individual price relatives.
These elementary indices are then aggregated through successive levels — sub-class, class, group, division — using fixed expenditure weights. Geometric averaging is applied only at the elementary level, reducing the influence of outliers and satisfying desirable index-number properties, such as time-reversal tests. As MoSPI notes, the Jevons index is the geometric mean of the price relatives of all the markets in a state.
Once elementary indices are computed, aggregation proceeds through weighted arithmetic averaging. State-level item indices are combined into national rural and urban indices, which are then aggregated into the all-India CPI using fixed national expenditure weights. The CPI is released monthly — typically on the 12th of the month for the previous month’s data — for rural, urban, and combined sectors, a schedule MoSPI has indicated it will maintain under the new series.
Changed Weight Patterns and Basket Composition
The revision significantly rebalances the basket toward current consumption patterns. Most notably, the food weight declines: combined “food & beverages” now accounts for 36.75% of CPI, compared with 45.86% in the 2012 series. This is consistent with Engel’s law, which states that higher incomes reduce the share of food in household expenditures. The household consumption expenditure survey data show rural food expenditure share falling from 52.9% in 2011–12 to around 47.0% in 2023–24 and urban food expenditure from 42.6% to about 39.7%. 

Housing costs gain prominence. The combined weight of “housing, water, electricity, gas & fuels” rises to 17.66%, from a little over 10% in the earlier combined series. This reflects the inclusion of rural rents and improved measurement of housing-related expenditure, implying that rent inflation will have a larger influence on headline CPI than before.
Service and durable categories also gain weight. “transport” and “information & communication” together account for about 12.4% of CPI, compared with roughly 7.6% earlier, reflecting increased spending on mobility and telecom services. “health” accounts for about 6.10%, “clothing & footwear” 6.38%, “education” 3.33%, and “recreation” around 1.52%. Overall, the revised basket shifts weight away from food toward housing and services, broadening the CPI’s coverage of household spending.
Data Collection and Methodological Innovations
The CPI revamp also modernises data collection. MoSPI has proposed greater use of technology, including mobile applications for field price officers and improved online data systems. The Expert Group explicitly recommended leveraging newer technologies to improve data quality. Administrative data and selected online prices are expected to supplement traditional market surveys where feasible, subject to methodological validation. Utility tariffs, transport fares, and prices for fuels such as LPG, CNG and PNG will be used to improve coverage of regulated and public services.
While CPI compilation remains monthly, the underlying consumption survey has historically been infrequent. Going forward, regular consumption expenditure surveys, potentially every 4–5 years, would help keep weights current. Price collection itself has been broadened, with refreshed market samples, greater rural coverage, and expanded varieties for seasonal items such as fruits and vegetables. MoSPI also plans to disseminate more granular data under the new series.
Technical Challenges and Innovations
Rebasing the CPI required resolving several technical challenges. Mapping the old CPI classification to COICOP 2018 was complex, as many consumption expenditure survey categories did not align neatly with new sub-classes and required splitting or reallocation using auxiliary data. The Expert Group oversaw this process to ensure comprehensive coverage.
To preserve time-series continuity, MoSPI will publish linking factors between the 2012- and 2024-based CPI series. These factors will allow users to splice the old and new indices and construct a consistent historical series. MoSPI has indicated that a back series from January 2013 will be released alongside the new series.
The revision also refines treatment of missing prices, seasonal items and rent measurement. Employer-provided housing is excluded from the rent index, while rural rent data are newly incorporated. Issues such as the pricing of subsidised or free items and rapidly evolving services, such as telecom plans, have been addressed through updated specifications and imputation methods that draw on international guidance.
Implications for Inflation Targeting and Policy
The revised CPI has important implications for macroeconomic policy. Under India’s flexible inflation-targeting framework, CPI inflation at 4% within a ±2% band anchors monetary policy. A more representative CPI improves the signal available to policymakers. With food carrying a smaller share of total weight, supply-driven food price swings will exert less influence on headline inflation, potentially reducing volatility. 
Analysts suggest that, on average, historical CPI inflation under new weights would differ only modestly from the old series, though periods of sharp food inflation would likely show lower headline readings. When CPI 2024 is released — scheduled for February 12 — policymakers and analysts will transition to the new series using the published linking factors, and measures such as core inflation will be computed accordingly. 
Overall, the CPI overhaul strengthens the credibility and relevance of India’s inflation statistics. By aligning the index more closely with contemporary consumption patterns, it ensures that monetary and fiscal policy are guided by a price measure that reflects how households actually consume today.

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