Imagine entering an antique store and coming across an old wooden trunk. Your eyes wander to a dusty corner where an old radio sits beside a stack of audio cassettes. Suddenly, you’re transported to a time when these items were cutting-edge technology, a time when their presence in households was commonplace. However, today, these items are deemed obsolete. This nostalgic scene could well be a metaphor for our current process of tracking the Consumer Price Index (CPI) and subsequently calculating inflation. We continue to monitor a basket of goods that includes torches, radios, tape recorders, CDs, DVDs, audio/video cassettes, and trunks, among some 300 other items. Although these have a minimal weight in the overall CPI calculation, we are clinging onto the past, tracking items that no longer hold the same relevance in our consumption patterns.
An evolving basket
The CPI basket should not be viewed as an unchangeable artefact frozen in time. On the contrary, the real consumption basket of a common Indian is fluid and continually evolving, mirroring the shifts in societal needs, preferences, and economic conditions. As time progresses, consumption patterns of individuals and households inevitably change. Technological advancements introduce new products and services.
