Base year to be 2004-05; 676 items in basket.
Starting tomorrow, the government will be releasing the new series of the wholesale price index (WPI) that will have 2004-05 as the base year and not 1993-94, which will be done away with completely.
The new series will have 676 items compared to the 435 commodities earlier, while the number of quotations or sources for collating the price data would be 5,482 from 1,918 previously.
“We are planning to review the base year once in a decade even though it was supposed to be after every five years. We will also look at the commodity basket every quarter by adding a new quotation. In the new series, more than 200 items have been dropped, while some have been grouped with other commodities,” M C Singhi, senior economic advisor, Department of Industrial Policy and Promotion, told reporters here.
He also said it would be difficult to ascertain whether the new series would be effective in pulling down the rate of inflation that has been spiraling since December 2009. “It should, however, smoothen the curve,” he added.
As normal practice, the government would release the overall wholesale inflation figure every month, while part of the data for primary articles, which contains food inflation, and the fuel category would be released weekly.
Some of the products that would be in the new series are television sets, canned meat, washing machines, computers, readymade and instant food products, mineral waters, dish antennae, gold, silver, telephone instruments, ice-cream, flowers and microwave ovens, among others.
The new series would also have a different weight, in line with the changes in the economy. The weight of the primary articles category in the WPI would now be 20.11 per cent compared to 22.02 per cent earlier, fuel and power would be 14.91 per cent from 14.22 per cent, while that of manufactured products would be 64.97 per cent against 63.74 per cent.
The new series was approved on September 9 by the Committee of Secretaries based on the recommendations of the working group earlier set up under the chairmanship of Planning Commission member Abhijit Sen. The working group submitted its technical report in May 2008 and recommended the change of the base year to 2004-05.
After being in double digits for five consecutive months, overall wholesale inflation rate came down to single digits at 9.97 per cent in July primarily due to fall in prices of food articles. The rate of rise in prices of the primary articles and manufactured products category had decelerated during the month while fuel prices had registered a significant rise.
The inflation rate for the primary article category had risen by 15 per cent on an annual basis. Food price inflation had eased to 10.3 per cent in July from 14.6 per cent in June. The annual rate of inflation for the fuel component stood at 14.3 per cent. The inflation rate for the manufactured products category was at 6.2 per cent.
