New index to measure retail inflation next yr

NEW DELHI: The government will release new retail inflation indices for rural and urban India in February next year, as it looks to improve the accuracy of figures for informed decision making. A report tabled in Parliament on Tuesday said the two indices will have 2004-05 as the base year.

”The data flow for the two new indices is stabilising. We will soon start to compile the indices on a trial basis,” said Pronab Sen, the country’s chief statistician.

Retail inflation, the benchmark for wage negotiations in various sectors, is currently measured by four different indices, with base years varying from 1984 to 2002.

“The current retail inflation measures are all narrowly based with outdated weights, leading to low reliability,” said Tushar Poddar of Goldman Sachs in a recent research note.

The four figures used currently are consumer price indices for industrial workers, urban non-manual employees, rural labourers and agricultural workers. The base year for these indices varies between 1984 to 2002.

For compiling the database for CPI-urban, the federal statistics office has been collecting data from retail outlets in more than 100 cities, and for CPI-rural data collection is underway in more than 1,200 villages.

Due to a shortage of hands, the statistics department has roped in officials from various departments including postal department. More than 2,400 postmen were engaged in collection of retail prices from villages across the country.

Currently, the labour ministry and the commerce and industry ministry are involved in compiling and releasing inflation figures. The ministry is also awaiting the cabinet’s approval for a single nodal agency for compiling data.