New CPI series out, retail inflation at 6 pc in January

New Delhi, Feb 18 (PTI) The new consumer price index,intended to reflect the actual movement of prices at themicro-level and help policy-makers like the RBI in betterframing of decisions was launched today, with initial datapointing to six cent retail inflation in January.

While Consumer Price Index (CPI), according to newseries, has increased to 106 in January this year from a baseof 100 in 2010, government has chosen not to mention theinflation figure saying the exact level could be arrived onlynext year.

Analysts were also guarded as the new indices have a longway before they evolve into the country''s benchmark forinflation.

The figure was arrived based on a comparison with theannual all-India CPI index average for the whole of 2010.

According to new series, all-India Consumer Price Indexstood at 106 (provisional figure) for January 2011 taking thebase at an annualised level of 100 for the entire last year.

"Since these indices are being introduced for the firsttime, annual inflation rates have not been compiled," theMinistry of Statistics and Programme Implementation said in astatement.

Inflation, as measured by the Wholesale Price Index --which remains the top benchmark -- stood at 8.23 per cent inJanuary.

Economists said the new series will help both theGovernment and Reserve Bank to frame their polices as CPI is abetter reflection of actual prices than the current practiceof following the wholesale price index (WPI).

Crisil chief economist D K Joshi said that the countrydesperately needed an index which is comprehensive.

"Not much should be read from the figure of 106 asreleased today. However, they could be used for framing policydecisions by both the Government and RBI with the passage oftime," he said adding the index will move up as there isinflation in the economy.

The WPI based inflation for the month under review stoodat 8.23 per cent.

The CPI has been released for rural, urban and all-Indialevels.

While the rural CPI indices stood at 107, CPI urban stoodat 104 during the month under review.

ICRA economist Aditi Nayar too said the new series wouldbecome benchmark for policy makers, including the RBI, in thefuture.

"Broadly speaking, India is one of the few countries inthe world using the WPI as benchmark. The new unified CPIwould help the RBI to frame policies in a proper manner," shesaid adding this reflects the micro level price situationmore clearly. .