Editorial: Inflationary data

Not surprisingly, as this newspaper's report on the IMF's study showed, there are as many detractors of the methodology as there are those that approve of it. But what complicates matters is that even the IMF's methodology would reveal different results if the official numbers reported every price change on time. As is well known, more than half the items in the list which are tracked every week by the official agencies have not been updated for more than a month and around 40 per cent of those items for three months. This situation has been worsening over the years. Indeed, the sharp spike in inflation reported in March this year was not so much due to a surge in prices that month, but was more the result of the official agencies suddenly getting the price data for selected iron and steel items that they had not updated for between six and twelve months! If over the period of the next few months, the government updates the prices of 40 per cent of the items, the inflation rate will reach a new high. So apart from the question of which inflation measure is a better one, the government needs to get its act together as far as timely updating of the price index is concerned. Correct policy actions, after all, can take place only when there is correct information about what is actually happening.