The Government launched a new consumer price index on Friday that combines data from rural and urban areas and includes sectors that were not part of the existing consumer inflation measure. The index, which uses calendar year 2010 as the base with a starting value of 100, showed a combined reading of 106 for the month of January 2011.
The Government has chosen not to cite an inflation estimate, saying the exact level can be ascertained only next year. "Since these indices are being introduced for the first time, annual inflation rates have not been compiled," the Ministry of Statistics and Programme Implementation said in a statement. The reading for urban areas was 104 and for rural areas 107.
Analysts expect the new series will help both the Government and Reserve Bank to frame polices as the CPI is a better reflection of actual price trends than the current practice of following the wholesale price index (WPI). Inflation based on the WPI was estimated at 8.23 per cent in January.
Groups
The new consumer price index has five major groups. Data showed the group of food, beverages and tobacco, which has almost a 50 per cent weight in the index, was at 108. The index for miscellaneous items like education, transport and medical care with a weight of 26.31 per cent, was at 104. The housing index was at 100, while the group for fuel and light read 106. Both carry a weight of about 9.5 per cent. Clothing and footwear, the smallest group with a 4.7 per cent weight, was at 107.
The Centre had taken some other steps as well to improve reporting of price data. Last year, it updated the WPI, bringing forward its base year to 2004-05 from 1993-94 and increasing the basket of commodities to 676 from 435. The Government also plans to launch a revamped gauge for industrial production to better reflect contemporary consumption and help policy makers take better-informed decisions.
Keywords: consumer price index, rural and urban areas, WPI
