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Monday, February 07, 2011

How to measure inflation in India

Ila Patnaik, Giovanni Veronese and I have a paper titled How to Measure Inflation in India?. The abstract reads:
What is the best inflation measure in India? What inflation measure is most relevant for monetary policy making in India? Questions of timeliness, weights in the price index, accuracy of food price measurement, and inclusion of services prices are relevant to the choice of measure. We show that under present conditions of measurement, the Consumer Price Index for Industrial Workers (CPI-IW) is preferable to either the Wholesale Price Index or the GDP deflator.
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Inflation measurement in India may just get significantly better, with the release of the new CPI. The paper should help in evaluating this new CPI and in evaluating its applications.
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1 comment:

  1. A JindalTuesday, 8 February 2011 at 13:16:00 GMT+5:30

    You may want to take a look at this post in my blog --
    http://fairval.wordpress.com/2009/10/01/the-true-inflation-situation-in-india/

    I have said for quite sometime, ET Commodity Index, and its components, are a very good gauge of wholesale inflation, and much more current. You get data as of yesterday.
    (I am not an economist, so my point here is not based on any study like u may have done for yr paper. But i know the data collected for ETCI is reasonably accurate and current)

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