Consumer Price Index (CPI) for AL/RL

News: Union Ministry of Labour and Employment has updated the base year for calculating the Consumer Price Index (CPI) for agricultural and rural labourers to 2019.

About Consumer Price Index (CPI) for AL/RL

• The Consumer Price Index for Agricultural Labourers (CPI-AL) and Consumer Price Index for Rural Labourers (CPI-RL) are vital economic indicators published monthly by the Labour Bureau, Ministry of Labour & Employment.
• They reflect the movement in the retail prices of goods and services consumed by rural and agricultural labor households in India.
• The New Series
  • The newly constructed CPI – AL & RL series (Base: 2019=100) replaces the CPI – AL/RL (Base: 1986-87=100) series.
  • The move is aimed at improving accuracy and reflecting contemporary consumption patterns.
  • Significance: The revised series has significantly enhanced the scope and coverage and incorporated many methodological changes in order to make the indices more robust.
  • Changes: These are –
    • The weighting diagrams (share of expenditure to total expenditure) have been revised due to changes in consumption patterns;
    • Use of the Geometric Mean (GM) in place of the Arithmetic Mean (AM), as GM moderates the volatility in prices;
    • Use of the latest classification of individual consumption according to purpose, in line with the Classification of Individual Consumption by Purpose (COICOP)-2018;
    • Calculation of prices of PDS items using the admissibility concept instead of availability as in the old series;
    • The revised series covers 34 States/UTs as against 20 States in the old series;
    • Prices are collected from 787 sample villages as against 600 villages in the old series;
    • Around 150–200 items are covered as against ~65–106 items in the old series.

About Consumer Price Index (CPI)

• It is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers.
• It is calculated for a fixed list of items including food, housing, apparel, transportation, electronics, medical care, education etc.
• In 2014, RBI has adopted CPI as the key measure for determining the inflation.

Different types of Consumer Price Index(CPI)