The new consumer price index, intended to reflect the actual movement of prices at the micro-level and help policy-makers like the RBI in better framing of decisions was launched today, with initial data pointing to six cent retail inflation in January.
While the Consumer Price Index (CPI), according to the new series, has increased to 106 in January this year from a base of 100 in 2010, the Government has chosen not to mention the inflation figure saying the exact level could be arrived only next year.
Analysts were also guarded as the new indices have a long way before they evolve into the country’s benchmark for inflation.
The figure was arrived based on a comparison with the annual all-India CPI index average for the whole of 2010.
According to the new series, the all-India Consumer Price Index stood at 106 (provisional figure) for January 2011 taking the base at an annualised level of 100 for the entire last year.
“Since these indices are being introduced for the first time, annual inflation rates have not been compiled,” the Ministry of Statistics and Programme Implementation said in a statement.
Inflation, as measured by the Wholesale Price Index — which remains the top benchmark — stood at 8.23 per cent in January.
Economists said the new series will help both the Government and Reserve Bank to frame their polices as CPI is a better reflection of actual prices than the current practice of following the Wholesale Price Index (WPI).
The Crisil chief economist, Mr D.K. Joshi, said that the country desperately needed an index which is comprehensive.
“Not much should be read from the figure of 106 as released today. However, they could be used for framing policy decisions by both the Government and RBI with the passage of time,” he said adding that the index will move up as there is inflation in the economy.
The WPI based inflation for the month under review stood at 8.23 per cent.
The CPI has been released for rural, urban and all-India levels. While the rural CPI indices stood at 107, CPI urban stood at 104 during the month under review.
The ICRA economist, Ms Aditi Nayar, too said the new series would become benchmark for policy makers, including the RBI, in the future.
“Broadly speaking, India is one of the few countries in the world using the WPI as benchmark. The new unified CPI would help the RBI to frame policies in a proper manner,” she said adding that this reflects the micro level price situation more clearly.