The govt also plans to make inflation data public through other means.
India will switch over to monthly, instead of weekly, reporting of headline inflation numbers as captured by the wholesale price index (WPI) within the next few months, a finance ministry official has said.
“We will shift to monthly reporting of WPI, possibly by the fiscal year-end,” he said, adding the government would also make public inflation data measured through other means.
“We will persist with year-on-year calculation as most countries do the same. But we will also disseminate inflation data measured through alternative ways, including the 52-weeks’ average inflation, build up during the fiscal year, weekly and monthly build-up as well as data that discount seasonal variations,” the official added.
A monthly inflation number is expected to be more accurate and in line with the practice in most developed countries. At the moment, India releases provisional WPI data with a lag of 10 days every Thursday. This is followed by a final number eight weeks later. The country also measures consumer price inflation through four different indices, all with a monthly frequency.
| INFLATION RATE AS MEASURED BY ALTERNATIVE WAYS | |||
| Method | 2006-07 | 2007-08 | 2008-09 |
| Year-on-Year | 5.35 | 3.11 | 10.72 |
| 52-week average | 4.61 | 5.12 | 8.45 |
| Fiscal year build up | 5.88 | 2.38 | 5.21 |
| Figures in % (Source: Ministry of Finance) | |||
However, to ensure that vital price movements are monitored as closely as before, the industry department will publish a separate index comprising fuel and agricultural commodities on a weekly basis. The monthly WPI is expected to cover nearly double the 435 items that the index captures at present.
Government economists measure inflation using these many methods, but the data are rarely made public. The finance ministry official hoped that by sharing the results of other measures with analysts and users, there would be better understanding of inflation as well as some calming effect on inflationary expectations.
The official added the Indian economy was markedly more sensitive to inflation now compared with a decade ago. “Earlier in the ‘90s, an inflation rate of 5-7 per cent was considered okay. Today, any inflation rate of beyond 5 per cent is considered intolerable.”