The Hindu Business Line : RBI paper on harmonised consumer price index

The Reserve Bank of India has released a discussion paper on construction of a harmonised index of consumer prices (HICP) based on the Consumer Price Index (CPI) for three reference population groups such as industrial workers, urban non-manual employees and rural labourers.

Currently, there are four CPI measures covering industrial workers, urban non-manual employees, agricultural and rural labourers. The data is complied on a monthly basis for major centers along with all-India indices for a limited or specific purpose, such aswage settlements.

HICP will reveal the behaviour of the different CPIs to be useful for macro-analysis and policy purposes, said a press release by the RBI.

"Ideally, a measure of inflation should cover the entire gamut of goods and services, being purchased by a consumer in the domestic market and should represent the entire spectrum of the population in a country. Thus, there had been a long felt need to develop a measure of CPI, which can meet these objectives," said the RBI release.

The discussion paper was prepared by the RBI's Department of Statistical Analysis and Computer Services.

Internationally, CPI is considered a suitable measure of inflation and is used for monitoring price stability in retail market. However, in India, the Wholesale Price Index is widely used to measure inflation.

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