Inflation might already be 7%

Inflation might already be 7%
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First Published: Sat, Feb 17 2007. 01 45 AM IST
Updated: Sat, Feb 17 2007. 01 45 AM IST
New Delhi: India’s wholesale price inflation touched 6.73% for the week ended 3 February, according to figures released by the government on Thursday. For those worried that it could go higher, there’s some bad news: it already could be. An analysis of the wholesale price inflation data for the past 12 months indicates that the actual number could be around 7%.
All original inflation numbers released by the government, including Thursday’s 6.73%, are estimates. The final number, the more accurate measure of wholesale inflation, is released roughly after a two-month lag. It could be either higher or lower than the actual number.
A. Prasanna, senior analyst, ICICI Securities, said that given the difficulty in collecting data on the 500 items that constitute the basket used to measure wholesale inflation, a divergence between provisional and actual measures was only natural.
For much of the past year, the actual number has been higher. The final inflation number for the week ended 3 February will be released along with provisional data for the week ended 31 March. Among the inflation numbers released on Thursday was the final or actual wholesale inflation number for the week ended 9 December 2006, which, at 5.63%, was higher than the provisional rate of 5.32% released earlier. “In 2002 when the inflation rate was going down, the actual figure used to be lower than the provisional figure. But now, it could be higher as the rate is rising,” said Prasanna.
D.K. Pant, associate director at credit rating firm Fitch Ratings India, said while the divergence showed that “actual inflation is higher than the provisional number, a better way to look at inflation would be to take an annual average.”
India is one of the few countries that release weekly inflation data. Developed countries normally do it monthly and the figures are accurate.
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First Published: Sat, Feb 17 2007. 01 45 AM IST
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