national Consumer Price Index

The government will introduce a national Consumer Price Index (CPI) in the third week of this month as part of its efforts to revamp price statistics. The national CPI is expected to eventually replace the Wholesale Price Index (WPI) as a benchmark for inflation.

According to Central Statistical Organisation (CSO), the first set of the new consumer indices will also includes CPI urban and CPI rural. Separate data for states and Union Territory-level CPIs will also be released. The national CPI, which has been made more representative by updating and expanding the basket, will capture all aspects of economy in a single window, an official said.

Besides WPI, currently there are three consumer price indices which include estimate for agricultural labourers, rural labourers and industrial workers. As Reserve Bank of India (RBI) needs one inflation index to rely upon, the CPI data will be key to the central bank to decide monetary policy, which is the practice worldwide. The single CPI will be applicable for the seventh pay commission, an official said, adding that at present, government employees are treated as industrial workers while determining the wages.

However, the new CPI will have no impact on wages under rural job guarantee scheme. As of now, the new indices will have 2010 as the base year, which will be shifted to 2011-12 once the 68th round of consumer expenditure survey is completed. The National Sample Survey Organisation (NSSO) is collecting data for urban centres and the statistics ministry has roped in the postal department to collect price data from villages. "The data coming from postal departments are not very uniform, but we are trying to streamline it," an official said.

National Statistical Commission, the apex body on core statistics, has already cleared the methodology for calculating the new CPI. The move came after the government felt that WPI-based inflation overstated the level of the price rise in the economy. Officials feel the new index will give a better picture of consumer price movement across the country.