The limits of CPI: It doesn't capture the true cost of living

Consumer price index boasts of a rigorous and robust design, but there are quite a few issues with it

As the cost of living shoots through the roof, the consumer price index (CPI) has become one of the most watched indices. The Monetary Policy Committee (MPC) is trying to anticipate the future movement of the index at each meeting to decide on the policy rates. It is acting cautiously — it raised the repo rate by 50 basis points a few days ago to avoid shocking the stock and bond markets, though the CPI has stubbornly remained outside its target zone of 4 per cent +/- 2 per cent on either side.

The Union finance minister has had to defend