Key points
- India will directly source price data from e-commerce giants like Amazon and Flipkart to improve its inflation index.
- This aims to reflect shifting consumption habits and address concerns about outdated data in the Consumer Price Index (CPI).
- The move will incorporate online prices into the CPI calculation, mirroring a global trend.
- The revamped CPI will include data on airfares and streaming services, reflecting changing consumption patterns.
India is set to significantly overhaul its Consumer Price Index (CPI), the key measure of inflation, by directly incorporating price data from major e-commerce platforms. This strategic move, announced by the Ministry of Statistics and Programme Implementation secretary Saurabh Garg, aims to address concerns about the current index’s accuracy and its ability to reflect evolving consumer behavior in a rapidly digitalizing economy.
The inclusion of online pricing data will provide a more comprehensive and up-to-date picture of retail inflation, aligning India with global practices adopted by nations such as the U.S. and South Korea.
The initiative involves collecting weekly average prices from e-commerce websites in 12 major Indian cities. The government is actively collaborating with platforms like Amazon and Flipkart to secure direct access to this data, which will then undergo rigorous cross-checking against a wider dataset to prevent inaccuracies.
This integration of e-commerce pricing, alongside data from airfare and streaming services, reflects a significant portion of household spending, ensuring the CPI remains a relevant and representative economic indicator.
The inclusion of this new data will be part of a larger CPI update planned for early next year. This update will also involve recalibrating the weighting of different goods and services within the index based on the latest Household Consumption Expenditure Survey (HCES), which indicates a shifting allocation of household budgets away from food.
This comprehensive approach highlights the government’s commitment to improving the accuracy and timeliness of its key economic data.
Beyond the CPI revamp, the Indian government is undertaking a broader statistical upgrade program. This includes the introduction of a new GDP series with a 2022-23 base year, reflecting economic changes, and improvements to employment reporting, aiming for more frequent and precise data collection.
These measures signal a wider effort to modernize India’s statistical infrastructure and ensure the accuracy and reliability of its economic indicators. The government aims to release a new Index of Services Production (ISP) by mid-next year, which will better track the services sector’s contribution to the GDP.
