Covid-19 impact: Govt holds back April CPI citing data collection issues

But it did revise the CPI inflation for March to 5.84 per cent from 5.91 per cent

The Centre on Tuesday released the consumer price index-based inflation (CPI) data only for certain sub-groups, but did not give the general CPI number, citing difficulties in collecting the data due to the Covid-19 pandemic. It, however, revised the CPI inflation for March to 5.84 per cent from 5.91 per cent.
 

However, in the sub-groups for which April data was released, like housing, health, milk and products, cereals, vegetables, fruits and others, there were clear trends of price rise compared to March.
 

The groups and sub-groups for which no data was released include meat and fish, pan, tobacco and intoxicants, clothing and footwear, fuel and light, household goods and services, transportation, communication, and miscellaneous items.

“The general CPI and indices at state/Union Territory level are not being released for the month of April, 2020,” said an official press release from the Ministry of Statistics and Programme Implementation.
 

“The price data are usually collected from selected 1,114 urban markets and selected 1,181 villages through personal visits by field staff on a weekly roster. In view of the preventive measures and the announcement of lockdown, the price collection of CPI through personal visits of was suspended with effect from March 19,” it said.

The ministry said that for April, price data was largely collected by telephonic enquiry from the designated outlets. This was supplemented by information collected during the personal purchase of field staff for the items being transacted from neighborhood outlets keeping in view the travel advisories.  “NSO accordingly collected prices from 674 urban markets and 524 villages, for commodities which were available and being transacted during the lockdown period,” it said.

“The curtailed CPI data broadly confirms our expectation of a month-on-month rise in food prices driven both by seasonal factors as well as the temporary supply disruptions induced by the lockdown,” said Aditi Nayar, principal economist with ICRA.
 

Nayar said during the lockdown, transactions in many non-essential services goods would have largely ceased. In the absence of transactions, prices would not have undergone a revision reflective of the extent of the demand shock. A realignment of prices is expected once the economic activity resumes in various sectors, to reflect the post-Covid demand-supply balance.
 

She said that given the likely muted demand for most non-essential items, weak pricing power for producers, and favourable base effect related to food items in the first half of the year, the average YoY CPI inflation is expected to cool to around 4.0 per cent or lower FY21 from 4.8 per cent in FY20.

“Based on this, we expect the Monetary Policy Committee to reduce the repo rate by 40 bps to 4.0 per cent, at or before the next scheduled policy review in June 2020, to soften the blow related to the Covid-19 pandemic on economic activity,” she said.
 

“The food inflation numbers may be understated as at the ground level, retail prices were going at a premium of 10-12 per cent due to lower supplies and higher delivery charges,” said Madan Sabnavis of CARE Ratings.