Revised data shows IIP growing faster, WPI easing

Wholesale price inflation eased significantly to 3.85% in April from 5.3% in March 2017, according to a revised Wholesale Price Index released on Friday, even as growth in the new series of the Index of Industrial Production showed a marginally stronger performance in March at 2.7%, compared with the old data series.

Meanwhile, consumer price inflation in April eased to 3% from 3.9% in March, according to a separate data release by the Ministry of Statistics and Programme Implementation on Friday.

The main change made to the two indices is that the base year has been shifted from 2004-05 to 2011-12 in order to make the data more contemporary and reflective of ground realities.

“The international recommendation is for a revision of these indices every five years, and so we are trying to stick to that,” Statistics and Programme Implementation Secretary TCA Anant said on Friday while announcing the changes. “The complaint also is that the old series, based on an old base, is not representative. We have also created technical committees that will constantly review the IIP.”

Aligning with GDP

“The purpose of these changes is to align WPI with GDP and IIP, and hence the 2011-12 base year has been taken,” Department of Industrial Policy & Promotion Secretary Ramesh Abhishek said at the press conference. “The other change is that the WPI will no longer incorporate indirect taxes, which means they will be insulated from policy changes.”

Previously, the WPI was calculated on the basis of the base price plus excise duty minus any trade discount. The new formula, according to Mr. Abhishek, removes the excise duty aspect.

The IIP grew 2.7% in March 2017 according to the new series, compared with 2.5% according to the old series. Within this, the mining sector grew 9.7% in March 2017 according to the new series compared with 7.9% as per the old data. The manufacturing sector growth rate was 1.2% compared with 1.3% according to the old series.

More recent

“The new series show higher growth rates as compared to the old series which can be attributed to shifting of base to a more recent period, increase in number of factories in panel for reporting data and exclusion of closed ones and inclusion of new items and exclusion of old ones,” Care Ratings said in a report.

Growth in the WPI stood at 3.85% in April 2017 according to the new series, compared with 5.3% in March. Within this, primary articles inflation was 0.4% in April, down from 4% in March. Inflation in manufactured products remained the same at 3%.

The slowdown in inflation in the consumer price index was mainly driven by easing food prices, with inflation in the food and beverages segment easing to 1.2% in April compared with 2.5% in March. The other significant change was an acceleration in inflation in the fuel and light segment to 6.1% in April from 5.5% in March.

“The release of new WPI data on the 2011-12 base makes it more comparable with the CPI which has 2012 as the base,” Chandrajit Banerjee, Director General, CII said. “Both CPI and WPI have declined in April, indicating a benign inflation scenario.”

Mr Abhishek added that his department has also created a technical committee to constantly review the WPI.

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Printable version | Aug 9, 2020 8:33:39 AM |

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