March CPI inflation figures may have caveats as data suffers due to Covid lockdown

New Delhi: The government is likely to release the retail inflation numbers for March with caveats while industrial production data is unlikely as factories stop production and data collection gets hit due to the Covid-19 pandemic and the countrywide lockdown to contain it.

The Ministry of Statistics and Programme Implementation (MoSPI) is assessing the quality and amount of data that can be collected to estimate the consumer price index (CPI) inflation for this month. The data for March is scheduled to be released on April 13.

“We are assessing the situation and the numbers would depend on the flow, quality and quantity of data,” an official aware of the development said. “We will put the caveats and see how much data we can put out.”

The Index of Industrial Production (IIP) for March could face problems because production has stopped due to the lockdown, the official said.

CPI is based on the prices collected from 1,114 markets in 310 towns and from around 1,181 villages. It is used as the base for policy rate revision by the Reserve Bank of India’s Monetary Policy Committee and used as a deflator while estimating economic growth.

“Since field investigators can’t go out, there is no data,” said India’s first chief statistician Pronab Sen. “So, CPI for April is unlikely. Around 60% of the consumption basket is not being transacted and tracking can only be done for what is being traded.”

Reserve Bank of India governor Shaktikanta Das has said projections of growth and inflation would be heavily contingent on the intensity, spread and duration of Covid-19.

He, however, said food prices may soften further under the beneficial effects of the record foodgrains and horticulture production, at least till the onset of the usual summer uptick.

Retail inflation slowed to 6.58% in February from 7.59% in January due to softer food inflation.

Independent economists said the net impact on inflation is difficult to gauge for this extraordinary period and the prime concern is not inflation but to support the economy.

“Many factors that are pulling CPI in both directions makes estimation difficult,” said NR Bhanumurthy, economist at National Institute of Public Finance and Policy. “Services component should come down but food inflation might spike but not across the basket.” He said estimating inflation rate now would be an injustice to the numbers.

Care Ratings chief economist Madan Sabnavis said delivery issues must be sorted to keep prices of essential goods like wheat, atta, rice, fruits and vegetables under check. “If delivery blocks are not cleared, then lots of wastage and pile of stocks will lead to price rise even though supplies are very high,” he said.

Food and beverages have a 45.86% weight in CPI.

Aditi Nayar, principal economist at rating agency Icra, said it is very difficult to predict price movements now with the lockdown as it there could be distress selling in rural areas and, at the same time, short supplies in urban areas.

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