Only one-third of WPI items revised

The industries department has started revising a large number of items in the wholesale price index (WPI), including coke, lignite and pigments, which had not been revised for a long time "" over four years in some instances.

In an earlier analysis for the period till April 26, it had been found that of the 365 items in the WPI, the index for as many as 166 items had not been revised for more than four months. The latest analysis as of June 21 shows that the index for around 55 of these 166 items has been revised.

In effect, only one-third of the items have seen an index revision. During this period, headline inflation has moved from 8.27 per cent to 11.63 per cent. While a significant portion of the rise is on account of the petroleum fuel price hike on June 4, the delayed revisions have also contributed to the increase along with the high base effect.

This underscores opinion that had the data for March and April been revised timely, India would have been spared the shock of massive upward revisions to inflation data, a development that adds to inflationary expectations.

"Headline inflation would have touched 8 per cent in March and 9 per cent in April, had there been timely revisions. The WPI was 50-200 basis point (bps) downward biased between February and April due to lack of timely revision of data," said Abheek Barua, chief economist, HDFC Bank.

For the week ended March 8, in one of the highest revisions in recent times, provisional headline inflation rate was revised from 5.92 per cent to 7.78 per cent. Similarly, WPI inflation data for the week ended March 15 was also revised to 8.02 per cent from the provisional figure of 6.68 per cent.

"You are not giving right price information to the market when items are revised with a lag. It sends a wrong signal. Credibility of the data also goes down," said Dharmakirti Joshi, principal economist, Crisil.

Interestingly, many items in the WPI, like mesta, raw silk, coir fibre, electronic ICs, semi-conductors, adhesives, which had not been revised prior to December 2007, have seen downward revisions due to decline in their prices. 
  

SAMPLE WPI ITEMS REVISED OVER THE PAST FEW WEEKS
Item	Unrevised  since	Earlier  index	Latest  index
Pigments	July, 2004	102.5	107.4
Lignite	March, 2005	184.0	213.9
Coke	Jan, 2005	364.1	475.8
Adhesives	April, 2008	166.0	163.1
Cotton shirtings	Sept, 2007	169.2	193.3
Beer & alcohol	June, 2007	197.0	215.7
Skimmed milk powder	August, 2007	275.9	299.6
Coffee	Nov, 2007	205.1	218.1

However, Barua feels the downward pressure that timely revision of these items would have exerted on the overall WPI inflation is "fairly marginal".

In a recent statement on the inflationary situation in the country, the finance ministry said as many as 75 items "" 19 primary articles, 3 fuel items and 53 manufactured products prices "" have declined since January 5, 2008. The index for many of these items had not been revised for a long time.