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New price index by year-end

NEW DELHI: With the method of calculating inflation drawing flak from various quarters, the Central Government will bring in a new and bigger Wholesale Price Index by this year-end, besides giving actual prices from next month.

The new WPI, which would be gradually replaced with new indices on service prices and prices at the producers level, would be released monthly against the current practice of weekly, a senior official said.

However, the price movements of essential commodities such as agricultural products would continue to be released weekly, he said.

From next month, the Government would also the release actual price quotations on a monthly basis. “In May, we will release prices of April so that prices are in the public domain,” he said.

The new index will comprise 980 items, twice the number (435) it now has, and the base year would be 2004-05 against the existing 1993-94, the official said. “The coverage of the new series has been rationalised by incorporating important new items, dropping unimportant items and amalgamating similar items,” the official said.

The increase in the number of items would largely include items from the manufacturing sector, which has a weightage of over 63 per cent in the present WPI.

Price quotations would also go up from the existing 1,918 to 6,000, giving a better picture of the price variation.

“All this exercise is aimed at providing more robust figures and streamlining the process so that there is accuracy in price movements,” the official said, adding that work on the new series was being done by the Department of Industrial Policy and Promotion in the Commerce Ministry.

The existing inflation index is being criticised by many as it does not fully capture prices, say, of services. Many brands that are no longer in markets are still in the index, experts said. As such, the WPI would gradually be phased out and replaced with the services price index and the Producer Price Index (PPI), the official said. — PTI

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