Sunday, February 6, 2011

How to Measure Inflation in India?

NIPFP Working Paper 83

Ila Patnaik, Ajay Shah and Giovanni Veronese
February 2011


What is the best inflation measure in India? What inflation measure is most relevant for monetary policy making in India? Questions of timeliness, weights in the price index, accuracy of food price measurement, and inclusion of services prices are relevant to the choice of measure. We show that under present conditions of measurement, the Consumer Price Index for Industrial Workers (CPI-IW) is preferable to either the Wholesale Price Index or the GDP deflator.