Govt survey finds per capita consumption spending up 33-40% in 2022-23 from 2011-12

The Household Consumer Expenditure Survey is crucial to updating the Consumer Price Index and the resultant headline inflation rate, which is currently based on the consumption patterns from 2011-12.

India's per capita monthly consumption expenditure was 33-40 percent higher in 2022-23 (August-July) compared to 2011-12 (July-June), according to the findings of the government's latest Household Consumer Expenditure Survey, released late on February 24.

Interestingly, while per capita monthly consumption in rural areas was 40 percent higher in 2022-23 at Rs 2,008, it was up 33 percent in urban areas at Rs 3,510 after adjusting for inflation.

This represents an average annual growth of 3.1 percent for rural per capita consumption and 2.7 percent for its urban counterpart. Over the same period, India's real GDP has grown by 5.7 percent on average each year.

This is the first of two back-to-back Consumer Expenditure Surveys (CES) being done by the statistics ministry, with the second one currently being conducted for the 12 months starting August 2023. The survey is crucial to updating the Consumer Price Index (CPI) and the resultant headline inflation rate, which is still based on consumption patterns from the 2011-12 survey.

The ministry had conducted one such survey in 2017-18 (July-June), but the government controversially junked it citing issues with the quality of data after the financial daily Business Standard reported in November 2019 that the draft report of the survey found consumer spending had fallen. The junking of the survey and not making its results public made it impossible to update India's CPI inflation data.

Moneycontrol had exclusively reported in August 2023 that the statistics ministry was mulling alternative ways to revise the CPI inflation series if the results of the ongoing CES were not made available again.

The ministry said in a statement on February 24 that the "detailed report of the survey will be brought out subsequently". As of now, it has only released a 'fact sheet' of the results.

The latest survey, which covered a total of 2.62 lakh households – 1.55 lakh in rural areas and 1.07 lakh in urban areas – was conducted by dividing the consumption basket into three categories: food items, consumables and service items, and durable goods. A total of 405 items are covered in the survey, up from 347 items in the 2011-12 survey.

The current CPI basket contains 299 items.

The survey will be used not just to revise the base year of the CPI series but also the basket of goods and services – and their weights – for which prices are to be measured.

A key addition to the current survey has been the collection of data on items households get for free through social welfare schemes. These include food items such as rice and wheat and others like laptops, bicycles, and school uniforms. The value of these items has been imputed using an appropriate method, giving rise to another set of figures: average monthly per capita consumption expenditure with imputation.

After imputing the value of items received for free, the monthly per capita rural consumption expenditure rises by Rs 46 to Rs 2,054, while that in urban areas increases by Rs 34 to Rs 3,544.

The release of the 'fact sheet' on the 2022-23 CES could seemingly put to bed a long-running gap in Indian official statistics, although some time remains until the CPI inflation series, among other data, can be updated using the results of survey.

A complete overhaul of the inflation series can only be done once the statistics ministry has conducted both the back-to-back surveys, with the second only set to be completed in July this year. The ministry is conducting two surveys this time around instead of just one on account of the changes made to the survey's questionnaire, which has been split into three.

Once the fieldwork is done, a further six months may be needed to get the surveys' results, after which work will begin on updating the CPI series. Moneycontrol had reported in April 2023 that while the earliest the revised inflation data could be released is August 2025, it may only be published in January 2026 since the series should ideally be launched at the start of a year.