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Measurement of Inflation in India: Issues and Associated Challenges for the Conduct of Monetary Policy

G. V. Nadhanael and Sitikantha Pattanaik

Working Papers from eSocialSciences

Abstract: In India, there is a large divergence between CPI and WPI inflation trends in the past, wide dispersion in inflation across commodity groups within WPI, and significant volatility in headline WPI inflation under the influence of supply shocks, the statistical limitations of prices data have received increasing attention in the policy debates. This paper presents the key issues in the current context, while also explaining how policy analyses relevant for the conduct of monetary policy could yield ambiguous results if inflation data used in such analyses have serious limitations. [Staff Studies].

Keywords: supply shocks; volatality; central bank; reserve bank; RBI; statistical issues; Exchange Rate; REER; financial; economic; Inflation Measurement; Monetary policy; India; CPT; WPI; commodity; prices; data; Inflation (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: Institutional Papers
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