The government today said monthly data on inflation would ensure informed capital market reaction and curb needless volatility.
"The monthly data would be much more reliable and accurate and market will be reacting to it much reliably. Needless volatility in asset market would also stop," Chief Statistician Pronab Sen said, reacting to the government's decision to release inflation data on a monthly basis.
Monthly inflation data will also be much more accurate than the weekly data on wholesale prices which is announced every Thursday, said Sen, who is also the secretary in the Ministry of Statistics and Programme Implementation.
The Cabinet Committe on Economic Affairs (CCEA) today decided to launch the Wholesale Price Index (WPI) data on a monthly basis. The government, however, would keep releasing price movement of primary articles, including food and fuel every week.
It was also decided to shift the base year for WPI from 1993-94 to 2004-05.
Monthly inflation data, Sen said, would prompt people and market analysts to take into account the Consumer Price Index (CPI), which is often overlooked. "Now the people will look at both WPI and CPI. Earlier the CPI used to be ignored," he added.
The new WPI series, Sen said, would reduce the differential between the provisional and final data, which used to be as high as 30 to 40 per cent.
On the rational behind continuing the practice of release of WPI data on weekly basis for primary articles and fuel, Sen said, "primary commodity are quite often assets themselves. Commodity exchanges do require frequent price changes, while the manufacturing sector does not require it more than twice a year."
