Weekly price index to be made monthly by year-end

Parameter

Present

Proposed

Frequency

Weekly

Monthly

Base year

1993-94

2004-05

Products covered

435

980 +

Price quotations

1,918

6,000 +

 The DIPP officials said the new reporting frequency will also be accompanied by a new-look WPI with a base year of 2004-05 instead of 1993-94. "The number of items covered under the index will be increased to over 900 from the 435 at present," they added.  A committee headed by Planning Commission member Abhijit Sen is preparing the new WPI series and is expected to submit its report soon. The weight of the fuel group will increase in the new index, with the majority continuing to be manufactured items.  In addition, the number of price quotations of products covered by the index is also likely to be increased to nearly 6,000 from the present 1,918. In effect, the sources of price data will go up significantly and lend wider coverage to the data collection exercise.  The government is planning a test run before the new-look WPI is released.  DIPP officials were at pains to explain that the new reporting frequency was on account of the fact that with the WPI basket being widened, it was difficult to compile and release accurate weekly data.  They added that the recent increase in the inflation rate does not reflect a price increase on a weekly basis, but is actually an annual increase. "It is mostly a statistical phenomenon," official said.  In the long run, the government is planning to switch to a Producer Price Index by combining the WPI and the proposed Service Price Index, which is currently being formulated.  "The Producer Price Index will cover price movements at the producers' level and will measure both input prices paid by producers for production to take place and output price that they receive on produced items," officials said.  The government may release the WPI and PPI data simultaneously for a period of time, after which they are likely to release only PPIdata.