Sunday, October 18, 2009

The long and short of inflation data : {Planning Commission, DIPP} vs {RBI, Fin Min}

India currently publishes the inflation data weekly , and UAE wants to publish it monthly from the current frequency of annually. While one seems to be doing it too fast (provisional and actual data would be separated by weeks), the other in 2008 decided that a wiser move would be to publish it monthly.

Currently, the Indian government releases weekly inflation data with a two-week lag and then releases the final data with an eight-week lag.Current headline inflation data is widely considered to be non-representative due to the continued use of an old base year (1993-94) and an outdated basket of commodities.

The concerns here are that a lag in policy interventions in case data comes in slow(in case of UAE).RBI's view however is that "it would face problems in preparing weekly statistical supplements if inflation data isn’t available with the corresponding frequency."

This Thursday, Montek Singh Ahluwalia put forth an interesting perspective to this debate :"they (government) have been working on it. May be it will come out actually I mean from the professional point of view this will be done, and obviously timing of it is always a matter of some concern because people always think that you are making the change for motivated reason.

The jury is still out on this one.

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