Does inflation make sense to the common man?

October 15, 2009

Who is the Minister for Ministry of Statistics and Programme Implementation?

When is the National Statistics Day celebrated?

An average person may find it difficult to answer these questions.

Just as it is difficult to understand why the people are hurting even if the government inflation figures are near zero if not negative as they were a few weeks ago.

To talk of inflation near zero after visiting the vegetable vendor seems surreal.

Experts explain this as due to food items having less weight or influence in the weekly inflation measure which assesses wholesale prices.

An individual spends much more on food than the weekly inflation index makes allowance for.

Some of this is also due to creaky statistical infrastructure.

Prime Minister Manmohan Singh himself indicated this in a speech to the conference of states on the management of statistics.

He pointed out that the National Statistical Commission had identified agriculture, labour, industry and commerce as sectors where the collection of raw data itself had declined.

That is a pretty exhaustive list.

As for inflation, efforts are on to evolve an inflation index representative of the country as a whole.

Do we need a single, credible measure for price rise or given India’s size — sectoral ones?

Should we have a separate, credible measure of inflation for ‘roti, kapda and makaan’?

As for the wholesale price index (WPI) the government has so far not come up with a decision on revamping it.

Is the issue getting clouded because of government tardiness?


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The simple solution would be to start using the Consumer Price Index. Yes, that does contain fewer items but more relevant ones. The CPI is not anywhere near zero and shows the true picture of the economy as it takes into account what the consumer buys at retail level, not the wholesale markets.

Many countries (even Pakistan) use the CPI as the official barometer for measuring inflation.

Am not sure when India will switch over to CPI since a high CPI will obviously not look good for the government at the centre. A separate ‘roti, kapda and makaan’ index would be better for the common man but certainly not good for those in power.

Posted by Toe Knee | Report as abusive

The common man does not need the government to tell him about the rate of inflation. He is monitoring and actually experiencing it on a daily basis every time he touches his wallet.

All this data collection, which is generally hopelessly out of date anyway, is excellent stuff for armchair economists, Montek Singh Ahluwalia and TV anchors and panel discussions. It gives them something to discuss endlessly and to no purpose or conclusion other than to make themselves feel they are doing something constructive. Why grudge them their simple pleasures.

Posted by Dara | Report as abusive

The statistics behind the determination of the weekly inflation figure is hackneyed. Based on figures which are more than two decades old as a benchmark. Cannot fathom why the GOI doest not publish realist inflation figures, which include rice@ Rs.39/- per Kg and wheat at Rs.26/- per Kg.Toor dhall at over Rs.100/- per kg When will the Babus stop this white washing and become transparent. Obviously the price rice in real terms is due to the recent pay revision of the babus too.

Posted by eswaran iyer | Report as abusive