Mint Quick Edit | What India’s revamped inflation gauge is likely to mean for monetary policy

The CPI was rejigged to include contemporary items of consumption for its coverage to offer more accurate readings. Online prices, modern gadgets and even spending on pets have found their way into the index, for instance, while the weightage of long-included products and services have been adjusted to better reflect their share in the consumer’s spending basket; this was done on the basis of Household Consumption Expenditure Survey findings of 2023-24.

Food, which formed a sizeable chunk of the old basket, has seen its weight reduce now that incomes have risen and its share of household spending has shrunk. Since food prices tend to be volatile, CPI inflation is likely to be less jumpy from now on. Greater price stability should ease the formulation of monetary policy, which must keep prices in control while fostering economic growth.