What's in India's Inflation Basket?

How India's Consumer Price Index is built from a basket of goods with weights from consumption surveys, why food has a large weight, and why the basket is being updated.

India’s main inflation measure is the Consumer Price Index (CPI), published monthly by the NSO.

The basket

The CPI tracks prices of hundreds of items, grouped into categories like:

Food and beverages: the largest group, with a weight of around 46 percent in the CPI with base 2012.
Housing.
Fuel and light.
Clothing and footwear.
Miscellaneous: transport, health, education and more.

Where weights come from

Weights reflect how households spent money in the 2011-12 consumption survey.

Why food’s weight matters

Vegetable price spikes, like tomatoes and onions, cause big inflation swings.
The RBI watches core inflation (excluding food and fuel) too.

Outdated weights

Since 2011-12, households spend relatively less on food. An outdated basket may overstate food’s influence.

New series

MoSPI worked on a new CPI series with a more recent base year and weights from the 2023-24 consumption survey, including more services and online prices.

The tomato effect

A sharp rise in tomato prices pushes headline CPI inflation up noticeably in one month, because vegetables have a large weight in the basket.

Thinking CPI weights never change

They are updated with new consumption surveys.

Key takeaways

CPI tracks a basket of goods with survey-based weights.
Food has had a weight of around 46 percent.
Old weights may overstate food's influence.
A new CPI series with updated weights was prepared.