WPI data may be released on monthly basis by Oct

MEASURING INFLATION

In a bid to move away from the existing system of reporting inflation data on weekly basis, the industry department has proposed to the Cabinet that the data be released once a month.

If approved, the monthly reporting will begin from October this year, government officials told Business Standard.

India releases data on weekly movement of the wholesale price index (WPI), which measures the annual inflation rate of 435 items in the basket with 1993-94 as the base year.

The Department of Industrial Policy and Promotion in the commerce and industry ministry acts as the nodal agency for compiling and disseminating the WPI data.

“The industry department has circulated a draft Cabinet note for comments from various ministries and departments. The target is to release monthly inflation data by October-end,” an official said.

It is likely that the switchover to a monthly reporting system will be supported by the finance ministry and the Planning Commission. Earlier, the finance ministry and the Reserve Bank of India had some reservations on the grounds that monthly data would delay the policy response.

“While the industry department expects a nod from the finance ministry on the issue, the central bank is still to come on board. The industry department is in consultation with the RBI on the issue,” the official added.

Sources said the industry department has proposed to release a weekly WPI on farm commodities to address RBI concerns.

“This is because farm products show weekly variations. Other product groups in the WPI show lesser variation during a week,” the official added.

Inflation has been on an upward curve this year, rising from 6.5 per cent to 12 per cent in less than four months from April. It rose to a 16-year high of 12.63 per cent for the week ended August 9.

This spurt in headline inflation saw the central bank raise the key interest rate by 125 basis points in two stages in June and July this year. It also increased the cash reserve ratio (CRR), the quantum of money that commercial banks are required to keep with RBI, by 75 basis points in June 2008.

The inflation rate is expected to peak by November at levels close to 13 per cent and then climb down gradually to drop into the high single digits by March next year.