New Delhi. In the month of October, the inflation rate in the country fell to a record low of only 0.25 percent. This news may seem like a relief on paper, but its impact on the pockets of common people was not the same everywhere. On one hand, the prices of some essential items decreased, while on the other hand, the prices of everyday services and personal care items continued to increase. That means the overall picture was half relief and half worry.
Oils gave the biggest relief to consumers this month. The prices of mustard, groundnut and refined oil declined marginally, continuing the trend of cheapness that has been going on throughout the year. There was a slight decline in ghee also. The prices of sugar, tea and coffee remained almost stable, due to which the kitchen budget remained somewhat stable.
Personal care products become expensive
But there was no relief in the prices of personal care and services. An increase of 0.3 percent was recorded in hair oil, shampoo, and cosmetic products. Barber and beauty parlor services also became expensive. This part may be a small part of consumer spending, but due to continuously rising prices, people did not actually feel that inflation had come down.
GST gave big relief
October brought good news for those who were planning big purchases. Prices of cars fell by 6.9 per cent and two-wheelers fell by 4.5 per cent as GST rates were reduced. TV, washing machine and fridge also became cheaper, while mobile and electronic goods declined slightly due to festive discounts and lower production costs. However, gold and silver showed the opposite trend. Gold became costlier by 12.5 percent and silver by 21.7 percent, due to which the prices of jewelery increased.
An increase of 0.9 percent was recorded in the rent and housing sector. Maintenance charges increased, but electricity and LPG prices remained stable. At the same time, domestic work, small repairs and local services continued to increase gradually.
Overall, the October data shows that India’s economy is in a period of slow disinflation. Essential food items and oils have become cheaper, but vegetables, personal care items and rent are still putting a burden on the pockets. Despite the record-breaking fall in inflation, the relief for ordinary families was not fully felt.
How is retail inflation measured in India?
Retail Inflation Rate in India is mainly measured on the basis of Consumer Price Index (CPI). It tracks changes in the average prices of goods and services consumed by consumers. CPI is compiled by the National Statistical Office (NSO).
measurement process
Base Year: At present 2012 has been considered as the base year. This means that the prices of 2012 are taken as 100, and subsequent prices are compared to this. This method is in force since 2011. After this there was discussion of changing the base year to 2023, but right now it is only 2012.
Basket of Goods and Services: The CPI includes a basket of over 300 goods and services, which is based on the spending patterns of rural and urban consumers. Following are the main categories-
- Food and Beverages (39.06% weightage): Vegetables, pulses, milk, grains etc.
- Housing (10.07%): Rent, electricity, water.
- Fuel and Light (6.84%): Petrol, diesel, gas.
- Education (6.3%): School fees, books.
- Health (5.89%): Medicines, doctor fees.
- Other: Clothing, transport, and other things.
Survey and Data Collection: Prices are collected from various cities and villages every month by the National Sample Survey Office (NSSO). Data is taken from about 88 cities and 1111 villages.
Rural (CPI-Rural), urban (CPI-Urban) and combined (CPI-Combined) indices are calculated separately.
Calculation of Inflation Rate: ((CPI of current month – CPI of same month last year) / CPI of same month last year) × 100.
When is it released: MoSPI releases provisional data on the 12th of every month, which becomes final the following month. RBI considers this CPI as the basis for monetary policy (like repo rate).
