CPI-Urban to track shopping trends of the middle-class

NEW DELHI: Urban India will now finally get a true measure of inflation. The government plans to soon launch a new price index that will include the commodities and services that urban middle class people typically spend on their daily shopping rounds.

The new index will be called Consumer Price Index-Urban.

“It will pick up price data from the malls and shopping centres in urban areas,” Central Statistical Organisation director-general S K Nath told ET. He also said the new index could be rolled out in this fiscal. In the present uproar on spiralling prices, the big question mark has been the reliability of the data given out by the government.

The middle class feels that the wholesale price index-based price data generally underplays the impact of rising prices. Even the proposed revision in the basket of commodities in the WPI will not solve the problem fully. The new CPI-Urban could solve the problem as it would capture movement of prices just at the point where urban Indian families spend their money.

It will also include, for instance, the impact of the rising prices of a hair cut, laundry services and the dinner ordered from the corner dhaba. The WPI, on the other hand, captures price data from the mandis and, to that extent, under-estimates the impact of rising prices.

At present, the only price measure that gives some indication of the cost of living in Indian cities is the monthly, CPI (Urban Non-Manual Employees). But the index just gives a comparative ranking of 59 cities of the country and, so, has a limited value.

Even the multinational companies for whom the present index was meant hardly use it to determine things such as dearness allowance for employees. The CSO expects the new scale will encourage MNCs to link the salary structure of their employees on a far more realistic scale.

The government produces three consumer price indices: other than the CPI (UNME), there is the CPI for industrial workers, used to calibrate the dearness allowance for government and public sector employees.