Measurement of food price movement is important to assess the changes in food prices as well as its impact on the general price level. Inflation in India is caused mostly by supply disturbances led by food items. There are two indices for measuring food inflation. The first is food price index calculated from food items that comes under the WPI, and the second one Consumer Food Price Index (CFPI) by CSO.
Consumer Food Price Index
The CSO launched Consumer Food Price Index (CFPI) constructing the index for early months of 2014 onwards. Consumer Food Price Index (CFPI) is a measure of change in retail prices of food items consumed by the population. Under the CSO’s CFPI, the index gives food price level changes for rural, urban and all India basis. The base year used in CFPI is 2012 as in the case of CPI.
CFPI is based on retail price quotations as in the case of CPI, whereas the food index of WPI is obtained from wholesale price quotations.
Composition of CFPI
The Methodology for the calculation of CFPI is similar to that of CPI. Base year and data are the same. In CPI, food and beverage group constitutes 45.86% of weight. Out of this, beverages and some of the eatable items are excluded to derive the CFPI basket of commodities. Weight of the CFPI commodities is 39.05% of the entire CPI basket (MOSPI Annual Report 2014-15, P.27). CSO brings CFPIs for the tree groups and hence there are three CFPIs:
- CFPI -Rural
- CFPI –Urban
Price quotations and data are collected from selected towns by the Field Operations Division of NSSO and from selected villages by the Department of Posts. Data are received through web portals being maintained by the National Informatics Centre.