Government plans household survey before CPI revision, say officials

In a move aimed at enhancing accuracy and relevance of Consumer Price Index (CPI), government officials have announced plans to conduct another comprehensive household survey before making any revisions to the index. The decision comes in the wake of the recent release of initial findings from the 2022-23 household consumption expenditure survey, highlighting shifts in domestic spending patterns.

The preliminary results of the survey indicate a major decrease in the share of food expenditure in household spending. Such findings hold implications for the weighting of food in the CPI, a crucial metric used by the central bank to formulate monetary policy.

Pronab Sen, the head of a government panel on statistics, stressed on the need to await the results of the upcoming 2023-24 household consumption expenditure survey, conducted between August 2023 and July 2024, before making any alterations to the CPI index. Sen highlighted key trends observed in the survey, noting a shift in spending patterns towards processed food, clothing, health services, and consumer durables as incomes rise.

Sen further elaborated that before incorporating new items into the CPI index, a thorough retail market survey would be necessary to finalise representative items and brands. He indicated that this process could take approximately 5-6 months, suggesting that changes to the base year of the CPI index might realistically occur only next year. Presently, the base year for the CPI index is set at 2012.

Geeta Singh Rathore, director-general of the National Sample Survey, affirmed that the final report of the 2022-23 household survey is expected to be released within the next two to three months. Rathore stressed that the forthcoming CPI index revision would reflect a closer alignment with price changes in the economy, underscoring the importance of ensuring the accuracy and reliability of household survey data in informing economic policy decisions.

(With Reuters inputs)