Submitted to:

Submitted by:
Chandan Kumar
Roll no: - 09
Sec: - A
Introduction

What is Consumer Consumption Index?

The Consumer Consumption Index (CCI) is a measure that examines the weighted average of
prices of a basket of consumer goods and services, such as transportation, food and medical care.
It is calculated by taking price changes for each item in the predetermined basket of goods and
averaging them. Changes in the CCI are used to assess price changes associated with the cost of
living. The CCI is one of the most frequently used statistics for identifying periods
of inflation or deflation.

Consumer consumption index is the most important component of GDP or an exchange of money
for goods and services. Contemporary measures of consumer spending include all private
purchases of durable goods, nondurables and services. In a purely free market, the aggregate level
of private consumer spending in an economy is necessarily equal to the total market value of
economic output.

The CCI statistics cover professionals, self-employed, poor, unemployed and retired people in the
country. People not included in the report are non-metro populations, farm families, armed forces,
and people serving in prison and those in mental hospitals. The CCI represents the cost of a basket
of goods and services across the country on a monthly basis. Those goods and services are broken
into eight major groups:

• Food and beverages

• Housing

• Apparel

• Transportation

• Medical care

• Recreation

• Education and communication

• Other goods and services

Reasons for Calculation of Consumer Consumption Index
 Determining the demand and supply of goods and services
 Determination of Purchasing power parity of consumers
 Provides critical input for calculation of consumer price index
 Helps in administering government programs
 Aids in the understanding of consumer behavior towards health care
 Gives an insight to the markets forces on the behavioral consumption pattern of consumers
for development of goods and services
 Helps in an understanding of Investment pattern and growth of economy

Use of Consumer Consumption Index

 It is used for periodic revision of consumer price index
 Determination of new markets
 Helps market researchers in analyzing the demands for goods and services
 Track spending trends of different types of consumer segments
 Helps government agencies to study the welfare of particular segment of the society and
population
 Economic policymakers study the impact of policy changes on the welfare of various
socioeconomic groups
Survey Synopsis

Type of Segmentation:
 I have taken the sample clerk segmenting and targeting the consumers from middle level
group of income i.e. income level between INR 25,000 – INR 40,000
 Have targeted civil court clerk towards the Male gender with four and five year experience.

Reasons behind choosing this Segment:

 The motive behind choosing this segment from the strata of population is that most of the
people fall under this income group.
 This income group determines and plays a very significant role to the consumer survey for
the goods and services
 The consumption under this income group is at the peak when it comes to day-to-day
expenses
 Another significant reason behind choosing this segment is that I myself wanted to
understand the mentality of the middle level income group
 And above all the 50% of the population comes under this group and it plays a heavy role
to the government and corporates in designing their policies

Mode of Calculation of CCI:

When calculating the CCI for multiple items, it must be noted that many but not all price indices
are weighted averages using weights that sum to 1 or 100. When calculating the average for a large
number of products, the price is given a weighted average between 1 and 100
to simplify calculation. The weighting determines the importance of the quantity of the product on
average.

I have calculated through Mean, Median, Mode and Percentage form the survey. My Survey is
based on the following parameters on the total income of survey sample.

 Shelter
 Transportation
 Food
 Insurance
 Health care
 Household operations
 Entertainment
 Gas
 Telephone and water
 Alcohol and tobacco
 Personal care

INCOME
ANAND ROHAN
9% 8%
SAGAR ROHAN
7%
AKASH SAGAR
10%
SAURAV
SAURAV
9% RAJHANS
RAHUL
GOURAV
7% MILAN
VINEET
RAJHANS
RAJESH
10%
RAJKUMARE RAJKUMARE
10% GOURAV
RAHUL AKASH
6%
RAJESH ANAND
VINEET MILAN
9%
7% 8%

Sales

8% 8%
8% 8%

11% 11%

5%
11%
8%
9% 8%
5%
 TRANSPORTATION

4% 9%
7%
9% 14%

11%
8%

5%
9%
8%
5% 11%

FOOD

8% 9%
7%
9%
9%
9%

8%
6%

10%
8%
10% 7%
 INSURANCE
9% 11%

11% 5%
5%

7% 7%

9%
12%

8%
5%
11%

HEALTH CARE

9% 6%

13%
9%

5%

14%
11%

8% 7%

4%
7%
7%
 HOUSEHOLD OPERATIONS

9% 9%

8% 9%

9% 7%

8% 8%

9% 8%

8% 8%

Entertainment

3%
5% 9%
8% 10%

10%
11%

8%

5% 12%

7%
12%
 TELEPHONE AND WATER

6% 12%
5%
8%

11%
10%

9%
9%

5% 11%
7% 7%

Alcohol and tobacco

1% 4%
3%
18% 5%

3%

22%
11%

8%
10%
7% 8%
 PERSONAL CARE

3% 5% 13%
7%
7%
12%
10%

8%
3% 14%
7%
11%

SAVINGS

23%

77%
 AVERAGE CONSUMPTION
4% 3%

7%
3% 11%
8%

14% 13%

13% 12% 2%
10%

The average consumer consumption per month is as follows –

 16% of the income is spent in Shelter out of average monthly income.

 9% of the income is spent in Transportation out of average monthly income.
 20% of the income is spent in Food out of average monthly income.
 4% of the income is spent in insurance out of average monthly income.
 5% of the income is spent in health care out of average monthly income.
 11% of the income is spent in household out of average monthly income.
 1% of the income is spent in entertainment out of average monthly income.
 10% of the income is spent in Gas out of average monthly income.
 16% of the income is spent in Telephone and water out of average monthly income.
 4% of the income is spent in Alcohol and Tabaco out of average monthly income.
 5% of the income is spent in Personal care out of average monthly income.
Conclusion
To diffuse the demanding and hectic lifestyle people now-a-days try to find ways to keep
themselves relaxed and refreshing, to avoid the tensions associated. Hence spending on
entertainment has also become a part of life now a day.

Insurance industry in India has changed rapidly in the challenging economic environment
throughout the world. In the current scenario, Indian insurance companies have become
competitive in nature and are providing appropriate distribution channels to get the maximum
benefit and serve customers in manifold ways. In todays day-to-day hectic and demanding
lifestyle, expenses on health care has become a must. Every second person has some niggle here
and there so allocating a budget out of the fixed income has become a necessity.

The CCI is a convenient way to calculate the cost of living and price level for a certain period.
However, the CCI does not provide a completely accurate estimate for the cost of living. Issues
that impede the accuracy of the CCI include substitution bias (consumers substituting goods for
others), introducing new products, and changes in quality. The CCI can also overstate inflation
because it does not always account for quality improvements or new goods and services.

Almost each person go for monthly savings to fight out contingent situations that might arise in
day-to-day life. Every respondent had very keen ides about their savings to mitigate the risks in
future.

So, therefore, would be an index incorporating the current value of a dwelling price sub-index
which, in some countries, would have a large weight under the third approach. Furthermore, the
weight for owner-occupied dwellings could be altered considerably when reweighting was
undertaken. (It could even become negative under the alternative cost approach if weights were
estimated for a year during which house prices had been rising steeply).
Then, there is the point that a rise in interest rates designed to halt inflation could paradoxically
make inflation appear higher if current interest rates showed up in the index. Economists' principles
are not acceptable to all; nor is insistence upon consistency between the treatment of owner-
occupied dwellings and other durables.
The CCI is a convenient way to calculate the cost of living and price level for a certain period of
time. However, the CCI does not provide a completely accurate estimate for the cost of living.
Issues that impede the accuracy of the CCI include substitution bias (consumers substituting goods
for others), introducing new products, and changes in quality. The CCI can also overstate inflation
because it does not always account for quality improvements or new goods and services.