The Reserve Bank of India is planning to bring a new Consumer Price Index (CPI) as the present indices, both the CPI and the WPI, have become less representative with the rising clout of services in the consumption basket.
"We are doing technical work on computing a Harmonised Consumer Price Index and we are in consultation with the government in this regard," RBI Governor YV Reddy has said.
The goal is to anchor inflation expectation in India so as to align them with the global levels as soon as possible for ensuring smooth economic integration with the global economy, Reddy said.
There are occasions when divergence between the Wholesale Price Index (WPI) and the CPI is larger than usual. In view of these considerations, the central bank monitors and disseminates all the CPI indicators, he said.
The new index is expected to bring the characteristics of the present Wholesale Price Index and the Consumer Price Index, both for the urban and rural people, together, analysts said, adding that the index would help in calculating a more realistic figure for the weekly inflation data.
Reddy said the increasing importance of services in the consumption basket is making the Wholesale Price Index (WPI) - the main measure of inflation - less representative.
A single CPI index could be even less representative as there are differing consumption trends for the rich and the poor, the rural and the urban and also among regions across the country, he said.