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Why is CPI calculated separately for rural and urban areas?

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CPI or Consumer Price Index measures changes in the price level of market basket of consumer goods and services purchased by households. In order to keep it simple, I shall avoid discussion on details such as government regulation of price of agricultural goods. read more

It is clear that the prices in urban areas will always be significantly higher than rural areas and the factor which influence the cost of products and service in urban areas are very different from that of rural areas. Hence the need for a separate CPI for urban and rural areas. read more

Page 9 CPI Numbers 9. Price Collection in Rural Areas 9.1 With a view to have a workload within manageable limits and considering the fact that the CPI (Rural) would provide the price changes for the entire rural population of the country, a total of 1181 villages ( Annex IV) have been selected at all India level. read more

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How rural and urban inflation compare in India - Livemint
Source: livemint.com