Govt to fix mismatch in commodities data
1 min read . Updated: 18 May 2023, 10:56 PM IST
PremiumThe mismatch between DoCA’s daily price and MoSPI’s monthly CPI data leads to wrong prediction of CPI inflation rate by banks, policy makers and other institutions, said a government official.
New Delhi: The department of consumer affairs (DoCA) is in talks with the ministry of statistics and programme implementation (MoSPI) to bring its daily commodity prices in sync with the Consumer Price Index (CPI), as these have been found to be divergent.
The mismatch between DoCA’s daily price and MoSPI’s monthly CPI data leads to wrong prediction of CPI inflation rate by banks, policy makers and other institutions, said a government official. The divergence in some commodities such as milk, salt and rice can be as much as 50%.
Officials give the example of rice, which has many varieties and types. The price for the type of rice DoCA captures may be different from the one MoSPI captures. For salt, both MoSPI and DoCA take into account iodized salt. In the case of milk, DoCA only considers the price of toned milk collected from milk booths. DoCA collects the prices of 22 essential commodities and uploads them on its website daily, while MoSPI gathers data for CPI once a month and makes it public with a lag of one month. Since both data sets are about prices, DoCA is looking to improve its price data collection.
The department collects commodity prices daily from 505 centres, each ensuring prices are collected from three retail stores in each locality through geo-tagging. “The department is trying to do price benchmarking against third parties like Reliance Mart and V-Mart by use of technology to bring more authenticity in the system ," Union Consumer Affairs Secretary Rohit Kumar Singh earlier told Mint in an interview. Queries sent on Tuesday to the MoSPI and the Ministry of Consumer Affairs remained unanswered.
As part of the plan, the department is also brainstorming with economists and practitioners to align commodity prices with CPI data. The initiative of improvement in data collection is expected to help the government to come up with better policy decisions and interventions.
CPI data, on the other hand, is collected by the National Statistics Office (NSO) from 1,181 village markets and 1,114 urban markets distributed over 310 towns and cities.
Inflation, as measured by the Consumer Price Index, is the change in the prices of a basket of goods and services typically purchased by certain groups of households. Currently, the CPI is calculated taking 299 items into consideration.
Inflation measures the decline in living standards. A consumer price index is estimated as a series of summary measures of the period-to-period proportional change in the price of consumer goods and services of a specified set of characteristics acquired, consumed or paid for by a reference population. Each summary measure is constructed as a weighted average of a large number of primary aggregate indicators. Each primary aggregate index is estimated using a sample of prices for a specific set of goods and services, or from a set of outlets or other sources of consumer goods and services obtained by residents of a particular region.