Does India's Fresh Consumer Price Index Series Address IMF Concerns?

India's new consumer price series, which promises broader representation, addresses IMF notified concerns linked to the South Asian nation's data integrity, according to a top central administration official.

“We have fundamentally changed the nature of the classification that we use. We’ve increased the markets, items, and we’ve added e-commerce online markets,” said Saurabh Garg, secretary at the Ministry of Statistics and Programme Implementation, citing a Bloomberg report.

On Thursday, India launched a new CPI series, which revealed the first set of data under the revised base year 2024 instead of 2012.

As per the latest consumption basket, the weighted items have been increased from 299 to 358. The number of good items has surged to 308 from 259, while the service items list is now 50 instead of 40.

“I am confident that we will continue to be among the best in terms of the methods we use to collect data,” Garg said.

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In December last year, the IMF had noted that India's data had "methodological weaknesses”, which could impact "surveillance". This was mostly basis the usage of 2012 as a base year.

After the base year got altered to 2024 to increase the accuracy of CPI, Chief Economic Advisor Dr. V Anantha Nageswaran noted, "Consumption behavior, market structures and the composition of household expenditure have evolved and the new CPI series therefore unsurprisingly reflects these changes."

Meanwhile, India's consumer price index (CPI)-based inflation for January climbed to 2.75% on higher food and precious metal prices, as per the first data set under the latest CPI series.

On the other hand, the inflation rates for rural and urban areas stood at 2.73% and 2.77%, respectively. 

The housing inflation stood at 2.05%, while the food inflation rose to 2.13% year-on-year (YoY), however, the impact of headline inflation is expected to be lower as compared to the previous series. The corresponding food inflation rates for rural and urban stood at 1.96% and 2.44% respectively.