India to Release Key Wholesale-Inflation Index on Monthly Basis

Oct. 20 (Bloomberg) -- India will release its key wholesale inflation number on a monthly rather than weekly basis, moving toward the practice of most other economies around the world.

The new wholesale price index with 2004 as the base year will debut on Nov. 14, Commerce Minister Anand Sharma told reporters after a cabinet meeting approved the gauge in New Delhi yesterday. The base year used for the current weekly index is 1993.

The government plans to eventually move to a new consumer price index next year as policy makers say wholesale prices don’t show the true costs borne by people. For now, a weekly wholesale index for food and fuel commodities will continue to be released to facilitate monitoring of prices that are “sensitive in nature,” a government statement said.

“India needs to move toward making consumer price inflation its benchmark, which will give a clearer description of the cost scenario,” said Krish Ramkumar, who manages the equivalent of $1 billion in Indian debt at Sundaram BNP Paribas Asset Management Co. in Mumbai. “The development yesterday appears to be a step in that direction.”

Until now, India’s statistics department has released four consumer price indices for different groups such as farm and industrial workers. The central bank and the finance ministry use the wholesale price index as the benchmark because the other inflation measures don’t capture the aggregate price picture.

Consumer Prices

The wholesale-price index climbed 0.92 percent in the week to Oct. 3 from a year earlier, the Commerce Ministry said on Oct. 15. Gains in consumer prices were far higher. The consumer price index for farm workers jumped 12.89 percent in August from a year earlier, while that for rural workers increased 12.67 percent, according to government statistics.

India will adopt a new consumer price index next year, Pronab Sen, the top official in India’s statistics ministry, said in an interview on July 17.

Sen said the only “compelling” logic for a unified consumer price index is for monetary policy purposes, as there is nothing “intrinsically wrong” with the wholesale price gauge and the four consumer price measures.

The wholesale price index provides a snapshot of producer prices while the consumer price gauges show the final cost paid by consumers.

The new consumer index, with a base year of 2007-2008, will be compiled from a sample of 2,000 villages, Sen said. He said the statistics department has subcontracted the field work to the postal department, which has put 2,400 people on the job.