NEW DELHI: India launched a new consumer price index on Friday aimed at measuring the cost of living across rural and urban areas as it battles to bring inflation under control.
Billed as the “common man” index, it will not replace India’s main price measure – the Wholesale Price Index – but it will give the central bank an extra tool to assess rising costs that are fanning public anger.
Existing consumer price indices do not “reflect the true picture of price behaviour in the country” as they do not embrace all parts of the population, India’s chief statistician T.C.A. Anant said ahead of the index’s launch.
A national poll last weekend found inflation, stoked by soaring food prices, was beginning to “seriously hurt” family household budgets.
The new index estimated consumer price inflation at six percent nationwide in January, more than two percentage points below the Wholesale Price Index, which measures a wider basket of goods such as machinery and basic metals.
The new tool joins a series of separate consumer price indices for industrial workers, agricultural labourers, and urban non-manual employees.
It will measure price rises in food, beverages and tobacco, fuel, housing, clothing, bedding, footwear and other goods.
Prime Minister Manmohan Singh has described inflation as a “serious” threat to India’s growth and the government has been racing to boost vegetable and other supplies to bring down food prices, the main driver of general inflation.
Official data on Thursday showed India’s food inflation slipped to 11.05 percent, the lowest figure for more than two months, helped by a large fall in vegetable prices, including onions, a culinary staple in the subcontinent.
Encouraged by the 27 percent drop in onion prices, the government on Thursday lifted a ban on onion exports after halting shipments in late December to cool domestic prices.
The central bank, the most hawkish in Asia, has raised interest rates seven times in less than a year to wrestle inflation.
ICRA ratings services economist Aditi Nayar said the new index over time could become the benchmark for fiscal and monetary policymakers in seeking to control inflation by more clearly reflecting prices at the “micro-level.”
“India is one of the few countries in the world using the Wholesale Price Index as a benchmark,” she said.
Source – AFP/de
Food for thoughts: You will probably continue to see the issue of inflation flashing in many regions around us. What have you done about it since than concerning your wealth protection? Are you taking measures to hedge against it or are you leaving it alone just like most people since they do not really know what to do, or felt that there is nothing much they can do about it? Awesome!