1. Revision of Consumer Price Index (CPI) Series: 2024 Base Year

The Ministry of Statistics and Programme Implementation (MoSPI) has officially transitioned the Consumer Price Index (CPI) to a new series with 2024 as the base year, replacing the long-standing 2012 series. This shift ensures that inflation tracking aligns with contemporary consumption patterns. Key Highlights of the New CPI Series • Base Year Transition: The base year has been updated from 2012 to 2024 to reflect the structural transformation of the Indian economy over the last decade. • Expanded Basket of Goods: The total number of items has increased from 299 to 358. This includes 308 goods (up from 259) and 50 services (up from 40), capturing a wider array of modern consumer needs. • Updated Weightage Logic: Weights have been recalibrated based on the Household Consumption Expenditure Survey (HCES) 2023-24, likely leading to a reduction in the weight of food items and an increase in non-food/service categories. • Broadened Data Collection: Price monitoring has expanded geographically, now covering 1,465 rural markets (previously 1,181) and 1,395 urban markets (previously 1,114) to improve data precision. • Current Inflation Printing: Under the inaugural data release of this series, retail inflation for January 2026 was recorded at 2.75%. • Policy Alignment: The new series facilitates a more accurate assessment of the \'cost of living,\' aiding the RBI’s Monetary Policy Committee (MPC) in inflation targeting. Constitutional & Legal Framework • MoSPI & NSO: The National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation, is the nodal agency responsible for compiling and releasing CPI data. • Collection of Statistics Act, 2008: Data collection for these indices is empowered by this Act, ensuring the reliability and legality of the survey processes. • Article 246: Matters related to \'Census\' and \'Statistics\' fall under the Union List (Entry 69 and 94) of the Seventh Schedule of the Constitution. • Inflation Targeting: Under the RBI Act, 1934 (amended in 2016), the central bank is legally mandated to maintain inflation at 4% with a tolerance band of +/-2%, using CPI as the primary anchor. Definitions of Key Terms • Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is used to measure inflation from the perspective of the buyer. • Base Year: A specific year used as a benchmark for economic indices. It is assigned a value of 100 to allow for the comparison of price changes over time. • Headline Inflation: The total inflation figure which includes commodities such as food and energy prices, which tend to be much more volatile. • HCES (Household Consumption Expenditure Survey): A survey conducted by the NSO to collect data on the consumption patterns of households, which forms the basis for deciding the weights in the CPI basket.Conclusion The update to the 2024 base year is a critical step in \'de-biasing\' inflation data. By incorporating more services and expanding the rural-urban market coverage, the index now better reflects the transition from a subsistenceheavy consumption model to a more diversified, service-oriented economy. This ensures that the Monetary Policy remains grounded in the actual economic reality of Indian households. UPSC Relevance • Prelims: Understanding the difference between CPI and WPI; identifying the agency (NSO/MoSPI) responsible for data; understanding the significance of base year changes and the HCES. • Mains (GS Paper III): Issues related to Indian Economy, Inflation Targeting (MPC), and the impact of updated statistical methodologies on inclusive growth and policy formulation.