‘Robust and representative’: New CPI to measure rural housing inflation, report

New Delhi: The Ministry of Statistics and Programme Implementation (MoSPI) on Thursday proposed some key changes in the Consumer Price Index (CPI) that will ‘form the basis of the new retail inflation series beginning February’, according The Indian Express.

The one of the key changes, according to the report citing a discussion paper, is monthly rent data collection in both rural and urban areas, opposed to what the report said the current practice of collecting it every six months only for urban areas.

The Ministry said government accommodations and other employer-provided dwellings will not be included in the housing index citing that they do not reflect transaction in the actual rental market, thus to ‘to eliminate distortions introduced sometimes due to concessional or employer-provided dwellings” in the CPI series’.

The proposed changes, according to the ministry, are aimed at making the housing index more “robust and representative” as in the existing CPI ‘housing has 21.67 per cent weight for urban areas and 10.07 per cent weight at all-India level.’.

When implemented, the revision will help accurately gauge the impact of rentals and housing prices on inflation, given the fact taking only urban areas and employer-provided dwellings may not reflect the actual situation, particularly considering the surge in rentals following the pandemic.

Meanwhile, economists previously has flagged the inclusion of the housing provided by the Centre, states, and public sector undertakings to their employees in the current CPI.