Base Year of the Consumer Price Index (CPI) Shifted from 2010 to 2012


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has revised the Base Year of the Consumer Price Index (CPI) from 2010=100 to 2012=100. In this revised series released released on 12 February 2015, many methodological changes have been incorporated, in order to make the indices more robust.

The basket of items and their weighing diagrams have been prepared using the Modified Mixed Reference Period (MMRP) data of Consumer Expenditure Survey (CES), 2011-12, of the 68th Round of National Sample Survey (NSS). This has been done to make it consistent with the international practice of shorter reference period for most of the food items and longer reference period for the items of infrequent consumption/purchase. The weighing diagrams of old series of CPI were based on the Uniform Reference Period (URP) data of CES, 2004-05, of the 61st Round of NSS. With this change in the weighing diagrams, the gap between Weight Reference Year and Price Reference Year (Base Year), which was six years in the old series, has now been reduced to six months only. Due to change in the consumption pattern from 2004-05 to 2011-12, the weighing diagrams (share of expenditure to total expenditure) have changed.

The number of Groups, which was five in the old series, has now been increased to six. ‘Pan, tobacco and intoxicants’, which was a Sub-group under the Group ‘Food, beverages and Tobacco’, has now been made as a separate Group. Accordingly, the Group ‘Food, beverages and Tobacco’ has been changed to ‘Food and beverages’.

Egg, which was part of the Sub-group ‘Egg, fish and meat’ in the old series, has now been made as a separate Sub-group. Accordingly, the earlier Sub-group has been modified as ‘Meat and fish’.

The elementary/item indices are now being computed using Geometric Mean (GM) of the Price Relatives of Current Prices with respect to Base Prices of different markets  in consonance with the international practice. In the old series, Arithmetic Mean (AM) was used for that purpose. The advantage of using GM is that it moderates the volatility of the indices as GM is less affected by extreme values.

Apart from All-India CPIs (Rural, Urban, Combined) for Sub-group, Group and General Index (All-Groups), which were released for the old series, all India Item CPIs (Combined) would also be available in the public domain for the users.

The Consumer Food Price Indices (Rural, Urban, Combined) are being compiled as weighted average of the indices of following Sub-groups, as practiced earlier in the old series (only the weights have been revised).



Tuesday, 31st May 2016, 11:47:42 PM

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