The weightage in the calculation of retail inflation seems to change with times and with the varied requirements that time brings and thus it would be suggested that a very comprehensive and reliable method should be now used for the calculation of retail inflation which in modern times could be done with the infusion of artificial intelligence which could be programmed to perfection based on the fast changing necessities. It is known that the retail inflation now is being calculated on the basis of a weightage of 45.9% on food and beverages, a mere 6.8 percentage on fuel which has in recent times increased dramatically and the core inflation which is 100%-food and beverage+fuel which calculates to 47.3%
Let us consider an example, it is known that a cup of tea in 1970 used to cost a mere 10 paisa and with a bhaji puri, sheera and tea costing a mere Re 1 only. Now a cup of tea costs Rs 10 minimum which means a 1000% increase. Also if you go for a bhaji puri, sheera and tea cup now it would cost about Rs 150 which is 15 times more. Also the actual requirement for a person in a lifetime of say 75 years in India could be used as a road map which would make it easy through an exhaustively devised artificial intelligence mode of calculation of retail inflation. All items of food with the basic necessities given higher weightage could be incorporated in the newly programmed artificial intelligence calculated basis for coming to a prudent retail inflation calculation. Basic food items could be categorized in actual necessities and those that are not so basic in daily requirements. The newly devised calculation could also incorporate in the order of necessities, the food items which could then be modified to reflect the basic requirements. In the food and beverage weightage, essential grains like rice, wheat, could be given higher weightage unlike the less required lentils. In vegetables also the most required like potatoes, tomatoes, onions could be given higher weightage as well as broad basing by including prices of fruits, spices and essential beverages could be rationalized so that the retail inflation becomes more relevant to the present situation. It is to be stressed here that the price of constructing a house has grown immensely and so the prices of steel and cement which are the main basics for construction should be given higher weightage. As far as clothing is concerned, mainly basic necessities in a lifetime could be calculated before arriving at essential clothing requirement weightage in calculating retail inflation. It would be highly exhaustive if almost all items are included in the calculation of retail inflation so that a comprehensive retail inflation figure is arrived at. A master artificial intelligence system for the inclusion of all items that are grown and manufactured so that a comprehensive retail inflation figure is arrived at is the need of the times.
It should be a point of concern that in America the Federal Reserve has targeted a retail inflation figure of 2% with this figure having been reached a pause if the interest rates was recently announced, and the US is a superpower, but it is rather very ironic how the Indian retail inflation is 5.6% which could be even higher if the weightage are subject to review. In India the retail inflation figures are not a true reflection of the ground realities and thus a revamp should be devised in accordance with the basic necessities and basic framework.
