India's CPI Weights Shift: Food Impact Reduced, Services Gain Importance

• India's new Consumer Price Index (CPI) series offers a more robust nominal anchor for macroeconomic policy.
• The weight of food and beverages in the CPI has been reduced from 45.86% to 36.75%, addressing volatility from supply shocks.
• Housing, transport, communication, and other services-intensive categories see increased weight, reflecting India's urbanization and formalization.
• The item universe expanded from 299 to 358 goods and services, with systematic integration of e-commerce price data.
• E-commerce prices from 12 online markets are now included, enhancing price representativeness without creating a separate category.

Why It Matters: New CPI weights better reflect India's economy, reducing food volatility and increasing services' influence.