Rethinking Housing Metrics: Expert Paper Challenges CPI Revisions

A technical paper by IIT-Bombay critiques proposed changes to the housing services component of the Consumer Price Inflation (CPI) calculations. The authors argue against monthly data collection across all dwellings, suggesting it would strain resources without improving accuracy. They advocate for enhancing the current six-month survey method instead.

An insightful technical paper from IIT-Bombay is challenging proposed revisions to the housing services component in the Consumer Price Inflation (CPI) framework. The paper, authored by Prof Ashish Das and Praggya Das, highlights multiple facets, welcoming new ideas like shifting the base year to 2024, yet expressing skepticism over certain changes.

Key concerns center around the proposed method of collecting monthly rent data from an expansive sample of over 25,000 dwellings. The authors caution that this move could unnecessarily inflate collection costs and responder fatigue while compromising data quality. Instead, they recommend continuing with the six-month panel survey method, which they deem more robust and cost-effective.

The paper also refutes claims of methodological flaws in the existing index, advocating for better data utilization over a complete system overhaul. It welcomes some changes, such as expanding rent measurement to rural areas and using the Census 2011 frame but warns against reverting to a cumbersome monthly collection model.

(With inputs from agencies.)