Price data once a month



The government will release inflation data, based on the wholesale price index, every month rather than on a weekly basis.

The base year for the new data has been changed to 2004-05 from 1993-94. “The new series of WPI inflation with 2004-05 as the base year would be introduced in November,” commerce minister Anand Sharma told reporters after a meeting of the cabinet committee on economic affairs.

However, the government will come out with a weekly price index for primary articles, such as rice and wheat, and commodities, including fuel and power, to facilitate the monitoring of the prices of agriculture commodities and petroleum products that are “sensitive in nature”.

The changes in the inflation data pattern are being brought in line with global practices. “The new proposal is based on the recommendations of the National Sample Survey Organisation, and the practice is followed worldwide,” said Sharma.

At present, the base year for the wholesale-price-index-based inflation is 1993-94, and it measures the price movements of 435 items. The new WPI will include more items, mostly processed food products and industries such as telecom which were earlier not properly reflected in the index.

Abhijit Sen, a member of the plan panel, who headed a working group that updated the existing index, said the existing price index, which uses 1993-94 as the base, might have been underestimating inflation. The new index will capture the economic scene better, he said. The panel plans to update the indexes of industrial production and consumer prices, too.

Officials said an underestimation could mean that the recent price surges seen in food items and industrial products such as metals was actually much higher. “WPI will now become more representative of today’s price reality,” said D.K. Joshi of Crisil.

According to policy-makers, monthly WPI data along with the weekly numbers for primary articles will help the Reserve Bank of India to better manage its monetary policy.

Plan panel officials said data generated under the new indirect tax regime — the goods and service tax is scheduled to be introduced from next fiscal — would come in handy in calculating the new index.
Source: Telegraph

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