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Consumption baskets of Indian households: Comparing estimates from the CPI, CES and CPHS

Author

Listed:
  • Goyal, Ananya

    (National Institute of Public Finance and Policy)

  • Pandey, Radhika

    (National Institute of Public Finance and Policy)

  • Sane, Renuka

    (National Institute of Public Finance and Policy)

Abstract

A study of inflation requires a fixed consumption basket. The last publicly available data on household consumption baskets is from Consumer Expenditure Survey (CES) 2011-12. A more recent source of data has been the CMIE Consumer Pyramid Household Survey (CPHS). In this paper we compare the weights of various commodities in the Consumer Price Index (CPI) series with the CES 2011-12 and the CPHS 2019. We first document the methodology of construction of the Consumer Price Index (CPI) including details on commodity classification, reference and recall periods. We find that while CPI is based on CES 2011-12, CPI weights closely match those of CES 2011-12 only once the sub-group `Housing' is excluded from the total consumption expenses. For comparison with CPHS, we first map the CPHS commodities to CPI to make them comparable. We find the differences in some categories such as food, household goods and services are less than 2 percentage points. Differences in the shares of commodities such as transport and communication, health, education and intoxicants are larger.

Suggested Citation

  • Goyal, Ananya & Pandey, Radhika & Sane, Renuka, 2021. "Consumption baskets of Indian households: Comparing estimates from the CPI, CES and CPHS," Working Papers 21/343, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:21/343
    Note: Working Paper 343, 2021
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    File URL: https://www.nipfp.org.in/media/medialibrary/2021/08/WP_343_2021.pdf
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    References listed on IDEAS

    as
    1. Erwin Diewert & John Greenlees & Charles R. Hulten, 2009. "Introduction: What Are the Issues?," NBER Chapters, in: Price Index Concepts and Measurement, pages 1-16, National Bureau of Economic Research, Inc.
    2. Dora L. Costa, 2001. "Estimating Real Income in the United States from 1888 to 1994: Correcting CPI Bias Using Engel Curves," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1288-1310, December.
    3. W. Erwin Diewert & John S. Greenlees & Charles R. Hulten, 2009. "Price Index Concepts and Measurement," NBER Books, National Bureau of Economic Research, Inc, number diew08-1, March.
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    Cited by:

    1. Pandey, Siddhi Gyan, 2021. "Evolution of cooperative networks," Working Papers 21/346, National Institute of Public Finance and Policy.

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