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Gov revises method of calculating consumer price index

On the heels of revising the way in which the Gross Domestic Product or GDP of the country is calculated, the Central Statistics Office has revised the parameters for calculating consumer price inflation.

According to the new method, January CPI inflation rose to 5.11% from 4.28% in December, while it was 5% under the old method.

CSO revised the CPI series with a new price reference year of 2012. In addition, it also introduced a number of changes, which, CRISIL Research said, “will make CPI a more accurate and less volatile measure of inflation.”

crisil-inflation

“In addition, the new CPI gives greater weight to core categories than before,” it said.

“Despite the rise in inflation in January, inflation remains in the comfortable zone. We expect RBI to deliver rate cuts in the range of 50-75 bps in the next fiscal,” it said, adding that inflation is expected to average at 6.5% for this fiscal.

“For 2015-16, we expect inflation to average at 5.8% supported by lower oil prices, normal monsoons, pro-active steps by the government and better monetary and fiscal coordination.”

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