The government today approved the release of the headline inflation data on a monthly basis, in line with the global practice, for most of the items tracked by the Wholesale Price Index (WPI). It also decided to upgrade the base year for inflation from 1993-94 to 2004-05.
With the new series, the food and fuel category would have less representation in the index, while manufactured products, which at present have a weight of 63.75 per cent in the index, will have an increased weight of around 80 per cent in the series.
Analysts and economists believe that the monthly released data would reduce gaps and enhance the quality of the data. At present, only about a fourth of the data are collected and the rest are extrapolated from the existing index.
“The base change is important, as it would make the data more relevant. Moreover, the release of data on a monthly basis will reduce the reliance on revised figures. It will be more accurate,” said DK Joshi, principal economist with ratings firm Crisil.
Though data on manufactured products will be released monthly, those on primary and fuel items will continue to be released every week, since they change more frequently. “The new series of WPI, with a base of 2004-05, will be launched soon,” said Commerce and Industry Minister Anand Sharma after after a meeting of the Cabinet Committee on Economic Affairs (CCEA). The government intends to release the new series after November 14, Sharma later told reporters.
Analysts also feel that the monthly release of data would bring stability in the way inflation guides the monetary policy. “The unnecessary excitement and anxiety, which has become the norm, will die down. It may bring about stability in the process of monetary formulation and enhance the understanding of the situation. It will probably give the Reserve Bank of India more headroom to make policy decisions,” said Abheek Barua , chief economist, HDFC Bank.
Essential commodities
The government today said it would ensure the availability of rice, wheat, sugar and other essential commodities at reasonable prices, amid growing concerns about rising prices.
The Cabinet Committee on Prices, at a meeting chaired by Prime Minister Manmohan Singh, reviewed comprehensively the prices and availability of essential commodities like wheat, rice and sugar, Commerce and Industry Minister Anand Sharma told reporters after the meeting.
