CPI 2024 Series: Changes to India’s inflation weights explained in three simple points

Overall, the new consumer price index (CPI) series provides a more coherent, robust, and analytically tractable nominal anchor for macroeconomic surveillance and policy formulation in an economy undergoing rapid structural transformation.

What does the change in weights indicate?

The reduction in the weight of food and beverages from 45.86% to 36.75%, addresses a long‑standing volatility in headline inflation, where high frequency supply shocks in perishable items often disproportionately influenced aggregate inflation outcomes and underlying demand conditions.

By realigning the index with contemporary consumption patterns, the new revised index reduces noise and improves the signal-to-noise ratio of inflation readings, thereby enhancing its applicability for monetary policy assessment.

Concurrently, the upward reweighting of housing, transport and communication, and other services‑intensive categories reflects India’s structural shift toward an increasingly urbanised, formalising, and digitally integrated economy.

From an analytical perspective, this reconfiguration is critical: prices in these sectors typically exhibit greater persistence and lower mean reversion than food prices, rendering them more informative for modelling core inflation dynamics, estimating inflation inertia, and assessing medium‑term price pressures.

Have the divisions/groups expanded?

The item universe has expanded to 358 goods and services instead of 299 with systematic integration of e‑commerce price data.

Source: Ministry Of Statistics and Programme Implementation

What about the reflection of e-commerce? Is it wrong to expect a reflection of e-commerce in this particular report

It is not incorrect to expect a reflection of e‑commerce in this report. The CPI 2024 series does incorporate e‑commerce by including prices from 12 online markets, with weekly price collection from e‑commerce platforms. However, e‑commerce is treated as a price collection source rather than a separate category, ensuring better price representativeness without altering the conceptual structure or weights of the index.