The Hindu : Business : RBI for unified consumer index

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Friday, Oct 13, 2006
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RBI for unified consumer index

Special Correspondent

The index can facilitate global comparisons

MUMBAI: The Reserve Bank of India (RBI) on Thursday suggested construction of a Harmonised Index of Consumer Prices (HICP), based on existing four Consumer Price Index series, which would provide a common measure of consumer price inflation for the country as a whole and also could facilitate international comparisons of consumer price inflation.

However, the study says this task would be undertaken in a phased manner. "At all India level, such a measure that reflects the purchasing power of domestic currency in domestic market can be useful to the RBI for monetary policy purposes as well,'' it noted. At present, four distinct CPI measures for different reference populations are compiled on a monthly basis for major centres along with All-India indices. These are Consumer Price Index for Industrial Workers (CPI-IW: base year 1982), Consumer Price Index for Urban Non-Manual Employees (CPI-UNME: base year 1984-85), and Consumer Price Index for Agricultural Labourers and Consumer Price Index for Rural Labourers (CPI-AL and CPI-RL, respectively with base year 1986-87).

For computation of HICP, the study by the RBI considered existing three CPI series, CPI-IW, CPI-UNME and CPI-RL, as CPI-RL covers the agricultural labourers, which implicitly forms part of CPI-RL and 1986-87 has been taken as the base year for HICP.

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