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Urgent update: On the India’s Consumer Price Index

India needs to revise its Consumer Price Index urgently

The retail inflation (मुद्रास्फीति) data for October once again underscore the fact that the update of the Consumer Price Index (CPI) cannot happen fast enough. The data show that the rate of overall inflation fell to just 0.25%, the lowest it has been since at least January 2012. On the face of it, this would be cause for celebration, but a deeper look reveals this drastic (काफी गंभीर, अत्यधिक) fall to be a statistical anomaly rather than an actual fall in price levels. The food and beverages (पीने का पदार्थ) category saw prices falling 3.7% in October, the largest in the history of the CPI’s current series. However, the main reason for this contraction (संकुचन) was not so much that food prices have fallen, but because food inflation in October last year was a blistering 9.7%. This high base ensured that food inflation in October 2025 was negative, even though vegetable prices in markets have been on the rise recently. With the food and beverages category enjoying a weightage (भारांक, वज़न, भार का अनुपात) of nearly 46% in the overall CPI basket, this statistical (सांख्यिकीय) anomaly in food inflation was responsible for pulling the entire index down. Indeed, inflation in nearly every other major sub-group — fuel and light, housing, tobacco, and the miscellaneous (Consisting of various kinds of things or elements; varied) category — was higher this October than last. The impact of the GST rate cuts has, so far, been seen only in the clothing and footwear category — the only one apart from food to see inflation lower than last year. All of this shows just how skewed (विकृत करना, पक्षपाती बना देना) the inflation measure is. Not only is it outdated, with the base year set as 2012, but the weightages are no longer accurate and more often obscure (अस्पष्ट) rather than clarify. The disconnect between the CPI and reality can perhaps best be shown by the fact that people the Reserve Bank of India (RBI) had surveyed in September had said that their perceived (अनुभव करना, महसूस करना) inflation rate was 7.4% — a far cry from what the CPI reported.

The urgency behind the update is not just because of the vast gap between measured and perceived inflation. It is also because the RBI’s Monetary Policy Committee uses the CPI as its benchmark (A standard or point of reference against which things may be compared or assessed) when deciding what to do with interest rates. Its next meeting is in December and it will have to decide whether to keep rates unchanged or to cut them. It will have to contend with growth data clouded by the temporary impact of the GST rate cut-related demand boost. Having to also parse through inflation data beset (परेशान करना, घेर लेना) by statistical anomalies will only make accurate policymaking that much harder. The Ministry of Statistics and Programme Implementation has said that the new series of the CPI will be ready by the first quarter of the next financial year. The sooner it happens, the better.

Courtesy: The Hindu

Important Word List With Meaning

1.Inflation (Noun)

Hindi Meaning – मुद्रास्फीति
English Meaning – A general increase in prices and fall in the purchasing value of money; the action or state of being inflated.

2.Drastic (Adjective)

Hindi Meaning – काफी गंभीर, अत्यधिक
English Meaning – Likely to have a strong or far-reaching effect; radical and extreme.

3.Beverage (Noun)

Hindi Meaning – पीने का पदार्थ
English Meaning – A drink, especially one other than water.

4.Contraction (Noun)

Hindi Meaning – संकुचन
English Meaning – The process of becoming smaller; the shortening of a muscle or word.

5.Weightage (Noun)

Hindi Meaning – भारांक, वज़न, भार का अनुपात
English Meaning – The relative importance or influence given to a particular factor, part, or element; the amount of weight given to something.

6.Statistical (Adjective)

Hindi Meaning – सांख्यिकीय
English Meaning – Relating to the use of statistics (the practice or science of collecting and analyzing numerical data in large quantities).

7.Skew (Verb)

Hindi Meaning – विकृत करना, पक्षपाती बना देना
English Meaning – To suddenly change direction or position; to make them biased or distorted.

8.Obscure (Adjective)

Hindi Meaning – अस्पष्ट
English Meaning – Not discovered or known about; uncertain; not clearly expressed or easily understood.

9.Perceive (Verb)

Hindi Meaning – अनुभव करना, महसूस करना
English Meaning – To become aware or conscious of (something); to regard as being such.

10.Beset (Verb)

Hindi Meaning – परेशान करना, घेर लेना
English Meaning – (Of a problem or difficulty) to trouble or threaten persistently; to surround or attack from all sides.

11.Miscellaneous (Adjective)

English Meaning – Consisting of various kinds of things or elements; varied.

12.Benchmark (Noun)

English Meaning – A standard or point of reference against which things may be compared or assessed.