The Indian cabinet on Monday approved switching over to monthly release of wholesale inflation data from its current weekly format to capture the prices of manufactured goods more accurately and in line with global practices.
Trade minister Anant Sharma said the government would also change the base year to 2004 from the present 1993/94 for calculating inflation, likely from November 14.
Analysts say since weekly data on wholesale price index-based inflation does not adequately capture the movement of prices of manufactured goods, government has to often revise the figures later. "The monthly inflation data would be introduced once a new data series comes," Sharma said adding that the government will continue with its weekly release of inflation data on food and fuel prices.
"It is definitely a welcome move that will help provide data closer to reality. Currently, manufacturing data, which carries over 60 percent weight in the index, is not updated on a weekly basis," said A. Prasanna, an analyst with ICICI Securities Primary Dealership. "There will be no loss of information as the government will continue to provide data on food and fuel inflation on a weekly basis," he added.
At present, India releases the wholesale price index every week and consumer price index, where food items have greater weightage, every month. However, WPI is more closely watched as it covers a higher number of products. In recent months, the WPI and CPI have shown a wide divergence which has made policy making difficult. During August, while the WPI inflation was close to zero, the CPI inflation was at 10.4 percent.
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