New Delhi: Government will upgrade its inflation indices as the manufacturing and services sectors are not well represented in the current composition, the finance minister said in a written reply to Parliament on Friday.

The existing wholesale price index (WPI) series, which has a base year of 1993-94 will be replaced by a new one with the base year of 2004-05, he added.

“The WPI price data collection completely excludes the services sector and the receipt of input on weekly prices in manufactured products is very low,” Mukherjee said, responding to a question on whether the government is reviewing its price monitoring strategy.

The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is released weekly.

Government has plans to draw up a producers price index by modifying the present WPI, but work on that has been delayed due to problems in data collection.

“Data collection for CPI (Urban) has started,” Mukherjee said but did not give a time frame for its completion.

In 2001, the National Statistical Commission suggested streamlining its four separate consumer price indices (CPI) to a composite index as prevalent in developed nations to improve accuracy and help policy makers in tracking price movements.

But recent data shows a wide divergence between wholesale and consumer price indices and makes policy making difficult. In May for instance, the consumer price index shows a 8.63 percent jump in prices from a year earlier, but the wholesale price index reading shows a less than 2% jump.

On Tuesday, the central bank left its key policy rates unchanged but warned of price pressures and raised the inflation estimate to 5% at the end of 2009-10 (April/March).