Indian Wholesale and Consumer Price Indices

The Central Statistics Office of the Government of India launched a new Consumer Price Index (CPI) which will start producing consumer price inflation estimates from January 2012. The creation of the new index is a delayed response to the findings of the National Statistical Commission which found deficiencies in the existing systems of price data collection and the compilation of indices. Until relatively recently there have only been piecemeal changes in the system of measuring inflation in India with the Reserve Bank of India and various government departments relying mainly on a Wholesale Price Index to shape policy. The emergence of volatile inflationary pressures in recent years have seen greater urgency in the process of revising the methods by which price indices are measured in India culminating in the discontinuation of some indices, major overhauls in the methods of construction of others and the launch of the new all India CPI. This paper will review the main price indices published in India highlighting some of their main statistical and economic strengths and weaknesses and will discuss both the proposed and the actual changes that have been made.