End of weekly food inflation data

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Released by the Ministry of Commerce and Industry, the government has finally decided to stop releasing the weekly food inflation data and instead of this now it would release monthly headline inflation data.

Till now the weekly food inflation data used to contain primary food articles, fuel and power. Now the monthly data is in line with the standard global practice having its base year as 2004005. Now the total numbers of articles included are 676 as compared to 435 earlier.

Important Definitions:

Headline Inflation: It is a measurement of price inflation that takes into account all type of inflation experienced by an economy. It counts changes of the price of food and energy. It is more useful for typical household because it reflects changes in the cost of living.

WPI (Wholesale Price Index): It measures the change in price of a selection of goods at wholesale, prior to retail sales thus excluding sales taxes.

Base Year: A base year is a specific year from which the economic growth is measured. It has to be a normal year without large fluctuation in the production, trade and price of commodities in general.

Reason for Switching over to Monthly Data Release

It was found that the weekly reporting were prone to more statistical 'noise' and sometimes provided a misleading picture.

Importance from examination point of view:

i) Short Note - Headline Inflation, WPI
ii) Reason for switching over monthly data release
iii) Base year, why a particular year is taken as base year.

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