Retail inflation magnified? Reserve Bank cites NSO methodology

It points to a sharp divergence in inflation in the cereals sub-group

Various analysts had earlier doubted the accuracy of retail price inflation because of “overestimation” of the rate of price rise in cereals in January and February this year. The Reserve Bank of India (RBI) in its recent paper attempted to provide an answer to this anomaly.

There were differences between the figures arrived at by the National Statistical Office (NSO) and analysts due to the way the NSO aggregates data from the item level upwards to the numbers at the national level.

The paper, put out in the latest RBI Bulletin, called for a change in the aggregation method to make