Govt may include e-commerce data, expand coverage to improve calculation of retail inflation

The proposed revisions to the Consumer Price Index include leveraging modern data collection techniques such as sourcing price information from e-commerce platforms, expanding coverage beyond the major cities, and relying on privately rented dwellings to calculate housing rents, according to a presentation by the ministry of statistics and programme implementation on Wednesday. 

These changes are aimed at capturing spending behaviour more accurately across urban and rural regions part of a larger effort to modernise India’s statistical framework. 

Other key proposals including updating the base year for calculating the gross domestic product and the index of industrial production. While the current base year for these indices is 2011-12, a senior ministry official indicated that the revised base year for GDP is expected to shift beyond 2015-16.

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“The CPI overhaul responds to concerns that the existing index, based on consumption patterns surveyed in 2011-12, fails to account for significant changes in consumer behaviour over the past decade," the official said, speaking on condition of anonymity.

Experts, however, argue that this gap could distort official inflation figures, which are crucial in shaping the Reserve Bank of India’s monetary policy decisions, including interest rate adjustments.

The statistics ministry’s proposals were presented during a session on ‘The Treatment of PDS Items and Other Necessities in Consumer Price Index Compilation’, which was attended by policymakers and economists including NITI Aayog member Ramesh Chand; chief economic advisor V Anantha Nageswaran, statistics ministry secretary Saurabh Garg, and academics Surjit S. Bhalla and Mythili Bhusnurmath.

In addition to updating the methodology of calculating retail inflation, the ministry plans to digitise its data collection process, replacing paper-based surveys with digital tools to enhance accuracy and efficiency. The ministry also aims to publish more granular inflation data, enabling deeper insights into regional and demographic trends.

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More accurate

By engaging stakeholders and adopting innovative methodologies, the statistics ministry aims to ensure that the revamped CPI provides a more accurate and reliable measure of inflation, supporting better-informed policymaking and economic analysis, said the official quoted above.

The initiative underscores the government’s commitment to strengthen India’s statistical infrastructure and address longstanding issues of data accuracy and relevance in a rapidly evolving economic landscape.

During the discussions on the challenges of incorporating free Public Distribution System (PDS) items into CPI calculations, chief economic adviser Anantha Nageswaran underscored the significant role that ration items play in household consumption, calling for an evaluation of international practices and the involvement of a broader panel of experts to arrive at a comprehensive and informed decision.

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NITI Aayog member Chand emphasised the importance of analysing how free PDS distribution influences open market prices. He said careful consideration is needed to decide whether PDS items should be excluded from CPI calculations to ensure the index remains accurate and relevant.

Garg provided insights into the CPI’s scale and methodology, also highlighting regional variations in inflation.

“The CPI aggregates data from approximately 400 items across 1,200 markets," he said. "In Mumbai, forecasters pointed out that housing prices in the 10 major cities reflect very high inflation. However, when you factor in data from tier-one, tier-two and tier-three cities, inflation presents a significantly different and lower figure."