New Delhi
A new report by Crisil has proposed excluding gold from India’s core inflation index. The suggestion comes as gold prices, driven by global uncertainty, are seen distorting the true picture of domestic inflation trends.
Core inflation typically excludes food and fuel to focus on price changes linked to domestic demand. Crisil says gold should also be left out, especially when its rising price is due to global factors rather than local consumption.
Though gold carries only a 2.3% weight in the core index, it contributed 17% of the core inflation rise between May 2024 and May 2025. During this period, gold inflation averaged 24.7%, sharply up from 15.1% in the previous year. In contrast, other items in the index saw just 2.4% inflation.
Crisil noted that between May 2024 and May 2025, core Consumer Price Index (CPI) inflation rose by 111 basis points to 4.2%. This was mainly due to increases in prices of gold, silver, mobile tariffs, toiletries, and travel. Among these, gold saw the steepest rise.
The report warned that including gold inflates core inflation figures during global economic stress, misrepresenting domestic economic conditions. Without gold, core inflation in May 2025 would have been 3.4%, not 4.2%, showing a 65 basis point rise instead of 111.
Crisil added that while global central banks also include gold in their indices, its lower consumption weight means it has less impact. In India, gold has a greater role in household spending, increasing its inflation influence.
The firm urges a rethink to better reflect local economic realities.