One of the hardest things to understand in a vast, developing country is the true level of inflation. An accurate estimate of inflation is necessary for many economic agents including households who are trying to plan their finances. Noted economist, Ajit Ranade, who was for many years the Chief Economist of the Aditya Birla empire says that “Official inflation indicators, Ajit Ranade points out, understate the lived reality of Indian households.”
A more credible estimate of inflation, says Mr Ranade, comes from the RBI: “The Reserve Bank of India’s Inflation Expectations Survey of Households (March 2026 round) shows perceived inflation to be 7.2 per cent. This is more than double the official Consumer Price Index (CPI)-based reading of 3.2 per cent for February.”
So why does the official CPI published by the statisticians in New Delhi understate the actual inflation most of us experience. Mr Ranade explains: “India’s recently revised CPI basket still has a structural blind spot. It captures the rents paid by sitting tenants, whose lease rentals escalate annually by a formulaic 5–10 per cent, rather than the rents new entrants have to pay. Brokers and tenants across Indian cities routinely report double-digit rent increases even as official housing inflation remains subdued. The index is measuring the wrong price. The official thermometer is taking the temperature at the wrong site.”
The consequences of high inflation are significant as can be seen in the worker unrest which has gripped Noida in recent weeks. The rising cost of living and the high price of LPG cylinders in the black market seems to have been the trigger for this unrest.
Mr Ranade notes in his article that the Government of India, awake and alive to the risks posed by poor measurement of inflation, has in recent months moved to remediate its CPI inflation index.
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