Basket doesn't matter.

"The retail inflation rate in India -- measured by the Consumer Price Index (CPI) -- came in at 6.07% in February 2022, as per data released by the National Statistical Office (NSO) on Friday," ET. "Urban inflation in February moderated to 5.75%, down from 5.91% in January while rural inflation came in 6.38%, as against 6.12% seen in January." But, the items in the CPI basket no longer represent the consumption pattern of Indians, wrote Sachchidanand Shukla. According to the Ministry of Statistics and Programme Implementation (MOSPI) 2015, food and beverages comprise 45.86% of the CPI basket. Actually, the share of food has dropped by about 10.8% to 48.6% in rural and by 9.6% to 38.5% in urban areas. Hence, the present CPI basket tends to overestimate the rate of inflation and leads to tighter monetary policy which hurts growth, argued Shukla. The CPI basket also includes VCR/VCD/DVD players, camera and photographic equipment, radio, tape recorder, tape recorder, audio/video cassettes, etc,. which are no longer sold. This kind of analysis conveniently ignores the fact the India is one of the most unequal societies as, "The top 10% had a share of 64.64% in total household wealth, the highest since 1995," while "the bottom 50% decreased to its lowest levels since 1995 to 5.9%", HT. While the number of billionaires grew from 102 to 142 during the pandemic, "More than 4.6 crore (460 million) Indians meanwhile are estimated to have fallen into extreme poverty in 2020, which is nearly half of the global new poor, according to the United Nations (UN)," said Oxfam India. Naturally, consumption patterns vary widely with the rich not only consuming more in terms of quantity but also in quality, while the very poor are barely surviving on the cheapest non-nutritious food, Mint. The wholesale price inflation (WPI) jumped to 13.11% in February from 12.96% in January, which is 11 consecutive months of double-digit rise since April 2011, TIE. At some point, rise in input costs will have to be passed on to consumers, further aggravating retail prices. The Reserve Bank (RBI) has stubbornly kept interest rate at 4% since March 2020 in its delusion that this will somehow stimulate growth. Although down from its peak of $139 per barrel, Brent crude is trading at $101.3 per barrel today, oilprice. Because of inflation, the rupee has fallen to 76.39 to one dollar, xe. The State Bank of India (SBI) predicts the rupee falling to 77.5 to the dollar by June and inflation rising to 5% if oil is above $100 a barrel, ET. Will it? For some reason, economic projections by the government are based on oil at $70-75 per barrel, ET, which is what the RBI must be using. RBI Deputy Governor Michael Patra hinted that the RBI is likely to continue with negative real interest rate because growth may be affected by high cost of imports, ET. People, meanwhile, are being hammered by low returns on savings in banks, soaring prices of essential goods and possibly massive losses on investments in the stock market with prices of start-ups crashing by 68%, ET. High inflation means weaker rupee. Forget basket.