new wholesale price index is the most comprehensive ever
Nearly seven years after the establishment of a working group chaired by planning committee member Abhijit Sen, and two years after the submission of the technical report, a 2004-
05 as the base year has been launched.
The new wholesale price index series finally ushered in the dawn.
Nearly seven years after the establishment of a working group chaired by planning committee member Abhijit Sen, and two years after the submission of the technical report, a 2004-
05 as the base year has been launched.
While the preferred approach is to recompile any index series in ten years to reflect structural changes in the economy as well as new tastes and preferences for the basket of goods, here, even crossing the preliminary barriers to conducting preliminary studies for this purpose seems to be a long-term work.
But, at least in this case, waiting is worth it.
The WPI in the new avatar is the best built ever.
This is not only in terms of the number of goods covered --
676 instead of the existing 435-
Even in terms of price quotes --
5,418 instead of 1,918-
It is necessary to build an index at the base level.
To the extent feasible, prices will be charged at the first bulk point of sale in the domestic market.
Popular items like ice cream and mineral water, as well as gadgets like washing machines and micro ovens.
As mentioned earlier, 2004
05 was chosen as the base year as it was considered a normal year.
This is a wise move, during this base period, the formulation of price data and weights will not cause serious problems, nor will it cause problems in the collection of price quotations.
There are other welcome changes to the new index.
One notable feature is the combination of crude oil with domestic market prices. In the 1993-
Series 94, where this item is not found, its weight is assigned to the item in the mineral group.
Given acceptance-
At least in principle.
Necessity of transition to a free oil market system
This change is welcome;
Otherwise, the index may have to be modified later.
The PDS offer calculated in the earlier Index in another major reform was abandoned to support the purchase price of rice and wheat, which may represent the first point of sale of rice and wheat.
The largest share of the increase in the number of goods under the manufacturer Group --
From 318 to 555, only four were added to the primary group.
In the weight chart, in the three large groups, the increase under Fuel and Power and the decrease in the main item group between the new series are obvious, but the weight assigned to the manufacturer is slightly increased.
So, as in the past, the main weakness of using the new WPI as a barometer of inflation may persist, and at the same time, it may be closer to the producer price index, given the changes that are being proposed now.
Overall inflation may be largely affected by changes in manufacturing prices;
To make matters worse, the weight of the food dropped under the main items --to 14. 34% from 15.
The weight of the manufacturer\'s food is 40%to 9. 97% from 11. 54% —
Inflation could be more problematic than under 1993. 93 series.
The latest revision strengthens the case of the retail price index, similar to the wholesale index, which includes services, with a greater weight on the consumer basket of ordinary people.