Context:
The upcoming revision of the Consumer Price Index (CPI) will, for the first time, include housing inflation in rural areas, reflecting changes in consumer behaviour and the emergence of rental housing markets beyond cities.
Current Scenario
Housing inflation is currently measured only under urban CPI, due to the traditionally negligible number of rented homes in rural areas.
Key Drivers of the Inclusion
Recent consumption surveys show that rural residents are now spending on rent, indicating a rise in housing demand outside urban centres.
This trend is linked to:
- Greater mobility for employment
- Evolving lifestyle preferences
- A growing rural rental market
Timeline and Technical Changes
- The new CPI series is set to roll out in February 2026.
- It will be based on the 2024 base year, in line with updates to other macroeconomic indicators including GDP and Index of Industrial Production (IIP).
HCES 2022–23
The Household Consumption Expenditure Survey (HCES) 2022–23 provides the foundation for the revised CPI. Key findings include:
- Rural MPCE on housing rose from ₹7 (2011–12) to ₹30 (2022–23), a fivefold increase
- Housing’s share in rural expenditure doubled from 0.4% to 0.8%
- Urban MPCE on housing rose from ₹160 to ₹423 during the same period
- Housing’s share in urban expenditure reached 6.6%
The CPI update marks a significant methodological shift, recognising the economic transformation of rural India and aligning inflation metrics with present-day consumption realities.
