Household consumption won't hit inflation much

economictimes.indiatimes.com:

Household Consumption Expenditure Survey (HCES) will likely have limited impact on consumer price index and inflation calculations, as the food component still accounts for a significant proportion of consumer spending in the country, experts said.

The impact on urban inflation will likely be even lower than rural, as the decline in food spending is smaller for urban areas compared with villages. «The new HCES does not indicate big shifts in the consumer price index basket, as the ratio of food items remains high in total spending,» said Rahul Bajoria, managing director and head of EM Asia (ex-China) economics at Barclays. The HCES, which provides information and data on spending, is a key source of input for deciding of weights and shares for the composition of the inflation basket. The results, released on Saturday, were eagerly awaited in view of the update needed to the CPI basket, tilted heavily towards food. The latest survey will lead to an update of the base year for the calculation of consumer prices. It is 2012 for the current series based on the HCES of 2011-12. The National Statistical Office conducts the household consumer expenditure survey every five years. The last survey of 2017-18 was junked citing data inconsistencies. Experts say categories within food could bring about larger shifts in inflation dynamics. «Within food also there could be bigger shifts,» Bajoria said.

As per the survey, the share of cereals within the overall basket declined to 4.9% in rural areas from 10.7% in 2011-12. Pulses,