Key Points
Findings of the latest Household Consumption Expenditure Survey (HCES) will likely have limited impact on consumer price index and inflation calculations, as the food component still accounts for a significant proportion of consumer spending in the country, experts said...
The impact on urban inflation will likely be even lower than rural, as the decline in food spending is smaller for urban areas compared with villages..
"The new HCES does not indicate big shifts in the consumer price index basket, as the ratio of food items remains high in total spending," said Rahul Bajoria, managing director and head of EM Asia (ex-China) economics at Barclays..
Rural spending on food was down 6.5 percentage points in 2022-23 to 46.4% from 2011-12, the time period for which results are last available..
"Given the new weights in rural consumption and assuming a 10% inflation in food and 5% inflation in non-food items, the inflation as per new weights would be 30-40 bps (basis points) lower than 2011-12 weights," said Paras Jasrai, senior analyst, India Ratings and Research..
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