Key themes in new CPI: Gold, silver to back-series, Pg18

Key Highlights:

• India introduced a new Consumer Price Index (CPI) series using 2024 as the base year for prices.
• The new CPI includes updated goods and services reflecting current household consumption patterns.
• Retail inflation in January, as per the new CPI series, stood at 2.75%.
• Gold, silver, diamond, and platinum jewellery now have a combined weight of 0.93% in the new CPI.

Detailed Insights:

• The new CPI basket reflects current consumption patterns, unlike the previous one which was based on data from 15 years ago.
• Comparing the old and new CPI series directly is difficult due to changes in included items, data sources, and methodologies.
• While the Ministry of Statistics and Programme Implementation (MoSPI) has provided a back-series of CPI data to 2013, it is a mechanical exercise and not a complete reconstruction.
• The weight of food items has decreased in the new CPI, while the weight of gold and silver has also changed.
• High gold and silver prices in 2025 contributed to higher CPI inflation; without them, inflation would have been lower.

CPI

Key Concepts Involved:

• Consumer Price Index (CPI): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
• Base Year: The year whose values are used as the basis for calculating an index number.
• Inflation: The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.