MoSPI proposes changes to India’s housing inflation measurement
This proposal is part of a broader CPI base revision exercise aimed at making India’s primary inflation gauge more accurately reflect current household consumption patterns and price realities.
NEW DELHI : The ministry of statistics and programme implementation (MoSPI) on Thursday unveiled a discussion paper proposing significant changes to the way India measures housing inflation, a move that could reshape one of the most influential components of the Consumer Price Index (CPI).
The proposal is part of a broader CPI base revision exercise aimed at making India’s key inflation gauge more reflective of current consumption patterns and price realities.
The ministry said it is reassessing existing methodologies, exploring new data sources, and incorporating insights from experts and stakeholders to refine the tracking of consumer prices.
Housing plays a central role in this recalibration. It currently accounts for 21.7% of the CPI basket in urban areas and 10.07% at the all-India level, one of the largest single components.
With households devoting a substantial share of income to rent or maintenance of owned homes, shifts in housing costs have a far-reaching impact on both inflation readings and household welfare.
“Housing is a crucial indicator for the overall well-being of households, not only in India but across the world, as a significant amount of their income is spent either on house rent or maintaining an owned house," the MoSPI said.
The ministry noted that inflation data derived from the housing index serves as a critical tool for both policymakers and consumers.
“Inflation based on the house rent index is an important tool not only for the policy and decision makers but also for the households. Therefore, robust and relevant housing index compilation methodology for capturing its actual movement every month is of utmost importance," it added.
Part of wider CPI update
The discussion paper, which outlines the current methodology and proposed revisions, draws on international best practices and incorporates extensive stakeholder feedback.
“It provides detailed outlines of the existing methodology and proposed changes for the new series. MoSPI invites views and comments from experts, academicians, Central government Ministries/ departments, State governments, financial institutions, and other stakeholders on the proposed housing index compilation methodology," the ministry said.
The move marks the third in a series of papers released under the CPI base revision initiative.
Earlier, the ministry had issued two papers examining how free public distribution system items should be treated in CPI compilation.
Comments on the latest paper are invited until 20 November.
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