New measure, same pressure

New measure, same pressure

New Delhi: Two days ahead of its mid-quarter review by the Reserve Bank of India (RBI), government data, relying on a new base year, showed that the extent of inflation was lower than assumed earlier. Some economists believe that the new data should ease the pressure on RBI to effect a fresh rate hike.

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The new Wholesale Price Index, reflecting the changed structure of the Indian economy, with a base year of 2004-05, pegged inflation for August at 8.5% compared with 9.5% under the old series.

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However, the reworked index continues to reflect the pressure of food inflation—reporting it at 14.6% in August.

Food inflation has been in double digits all year, something that the central bank fears could spill over to other sectors.

Graphic: Yogesh Kumar/Mint

asit.m@livemint.com

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