India: CPI inflation figures may have caveats as data suffers due to Covid lockdown

  • The government is likely to release the retail inflation numbers for Mar 20 with caveats while industrial production data is unlikely as factories stop production and data collection gets hit due to the Covid-19 pandemic and the countrywide lockdown to contain it.
  • The Ministry of Statistics and Programme Implementation (MoSPI) is assessing the quality and amount of data that can be collected to estimate the consumer price index (CPI) inflation for Mar 20. The data for Mar 20 is scheduled to be released on 13 Apr 20.
  • “We are assessing the situation and the numbers would depend on the flow, quality and quantity of data,” an official aware of the development said. “We will put the caveats and see how much data we can put out.”
  • The Index of Industrial Production (IIP) for Mar 20 could face problems because production has stopped due to the lockdown, the official said.
  • CPI is based on the prices collected from 1,114 markets in 310 towns and from around 1,181 villages. It is used as the base for policy rate revision by the Reserve Bank of India’s Monetary Policy Committee and used as a deflator while estimating economic growth.
  • “Since field investigators can’t go out, there is no data,” said India’s first chief statistician Pronab Sen. “So, CPI for Apr 20 is unlikely. Around 60% of the consumption basket is not being transacted and tracking can only be done for what is being traded.”
  • Independent economists said the net impact on inflation is difficult to gauge for this extraordinary period and the prime concern is not inflation but to support the economy.
  • Reserve Bank of India governor Shaktikanta Das has said projections of growth and inflation would be heavily contingent on the intensity, spread and duration of Covid-19.

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