New retail inflation series for industrial workers: Base year shifted to 2016, no change in dearness allowance

Description

Context: The government has launched the new series for retail inflation for industrial workers shifting the base year to 2016 from 2001.

However, the dearness allowance, which is linked to the Consumer Price Index for Industrial Workers (CPI-IW), will remain unchanged for now.

CPI-IW

The CPI-IW is mainly used for determining dearness allowance (DA) paid to central/state government employees and workers in the industrial sectors besides fixation and revision of minimum wages in scheduled employments.
The new series also incorporates the changes in the consumption pattern of the working class families since the earlier base year of 2001.
Under the new series, the weightage for the food group has gone down to 39.17 per cent from 46.2 per cent in the 2001 series, while weight of miscellaneous items, like education and health has risen to 30.31 per cent from 23.26 per cent.
The weight of housing and clothing and footwear have changed to 16.87 per cent from 15.27 per cent and to 6.08 per cent from 6.57 per cent.
Weight of fuel and light segment will now have a weight of 5.5 per cent as against 6.43 per cent earlier, while pan, supari, tobacco and intoxicants will hold 2.07 per cent weight as against 2.27 per cent.
In the new 2016 series, 88 centres have been covered as against 78 centres in the 2001 series.
The number of selected markets for collection of retail price data has also been increased to 317 under the 2016 series compared to 289 covered in the 2001 series.
Government aims to keep the index revising every five years to reflect the changes that take place in the consumption pattern of consumers.