CA NeWs Beta*: The new CPI,according to experts,will eventually replace the Wholesale Price Index (WPI)

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Tuesday, February 21, 2012

The new CPI,according to experts,will eventually replace the Wholesale Price Index (WPI)

First all India retail inflation (CPI) data tomorrow

20 Feb 2012, 06:08 PM
  First CPI inflation data tomorrow
New Delhi: Starting tomorrow the government will release the nation-wide Consumer Price Index (CPI) on a monthly basis for better reflection of retail price movement and to help the Reserve Bank take effective monetary policy steps to deal with inflation.
    
The new CPI, according to experts, will eventually replace the Wholesale Price Index (WPI) for policy actions to deal with the price situation.
    
The monthly CPI will be in addition to the three retail price indices -- for agricultural labourers, rural labourers and industrial workers -- prepared by the Ministry of Labour.
    
The new data will be prepared by the Ministry of Statistics and Programme Implementation (MOSPI).
    
"CPI uses defined basket of goods and services that represents purchasing pattern of a particular household. Since this is driven from the consumption side, it provides a relatively realistic view on how consumers are affected," Deloitte, Haskins & Sells Director Anis Chakravarty said.
    
He said that for these reasons a reliable indication of demand side pressures and inflation is received from utilizing CPI as a measure.
    
Welcoming the new index, experts said it will take time, may be few years, before the CPI will replace WPI as benchmark for the government decision making and RBI's monetary policy.
    
WPI, as per Chakravarty, "poorly reflects the cost of living because it does not focus on the prices at which the consumer is purchasing the goods".
    
The WPI measures the price changes from the production side and not from the consumption side and hence it provides a skewed picture, he added.
    
Globally also the consumer price index is taken as the main benchmark.
(Agencies)
for more click http://zeenews.india.com/business/economy/govt-to-report-annual-cpi-from-tuesday_42412.html

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