Consumption pattern change may prompt CPI data rejig – Times of India

by The Technical Blogs


NEW DELHI: Retail inflation data is set for a rejig after the latest household consumption expenditure survey showed that the share of food and cereal consumption has fallen significantly.
Food accounts for nearly 46% in consumer price index (CPI) based on the 2011-12 household consumption expenditure survey. The latest data for 2022-23, which was released on Saturday, showed that total consumption of food as a share in rural areas has gone down from nearly 60% in 1999-2000 and 53% in 2011-12 to 46% now, marking the first time when it has gone below 50% mark.The trend was similar in urban areas with food consumption share declining to 39% now from 43% in 2011-12. This was also the first time that it was less than 40%.
“It will need to be rebalanced to represent current consumption patterns and share of food and cereals will go down,” B V R Subrahamanyam, CEO of government think tank Niti Aayog, has said. He said the contribution of food to CPI inflation would be lower and probably was lower in earlier years also. “This means inflation was being overstated and is probably less as food has been a major contributor to inflation,” said Subrahmanyam. Sharp spikes in food prices and the impact on retail inflation had come as a challenge for the central bank.


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