Prices keep rising: Food, clothing more expensive now

Expensive food and clothing pushed up the Consumer Price Index (CPI) by 1.18 per cent in August vis-a-vis the previous month, but experts said too much should not be read into the numbers, as the data on retail prices is yet to stabilise.

The CPI based on retail prices stood at 111.7 points in August, compared to 110.4 points in July, as per data released by the government on Monday.

At the all-India level, the CPI for 'food, beverages and tobacco' went up by 1.27 per cent to 111.7 points in August from 110.3 points in the previous month.

The main increase was seen in the prices of vegetables, with the index rising by 4.61 per cent month-on-month to 113.4 points, while the indices for milk and milk products and fruits went up by over 1 per cent each.

Similarly, the index for oils and fats went up by 1.27 per cent to 119.5 points.

Prices in the 'fuel and light' segment rose by 0.69 per cent in August vis-a-vis the previous month, with the index inching up to 116.4 points in August from 115.6 points in July.

. . .

In August, the CPI for 'clothing, bedding and footwear' stood at 117.7 points on an all-India basis, as against 116.4 points in July, an increase of 1.12 per cent.

The index for 'housing' was up 0.65 per cent month-on-month at 107.6 points in August, up from 106.9 points in July.

This is the third month that housing prices have been factored into the CPI data. However, the data was compiled only for urban areas.

The government had earlier said that "house rent is negligible for the rural areas" and as such, only urban areas have been taken into account for the index on housing.

The price of miscellaneous items rose by 1.19 per cent in August vis-a-vis July, as per the CPI data, with the index for this segment rising to 110.3 points on a countrywide basis in the month under review from 109 points in the previous month.

Experts, however, said the index cannot be used yet as a measurement of retail inflation.

. . .

"We cannot deduce much from the monthly CPI data. It needs time to stabilise," Crisil chief economist D K Joshi said.

He said inflation based on retail prices would only be ready for calculation from next year.

"The government began releasing the nationwide CPI from January this year. It will need at one full year before inflation data could be measured," Joshi said.

The general index for rural and urban consumers stood at 113.1 points and 109.8 points, respectively, in August.

In July, they were recorded at 111.6 points and 108.9 points, respectively, for rural and urban consumers.

Meanwhile, the overall June CPI reading has been maintained at the provisional estimate of 108.8 points.

. . .

Experts also said the movement in the CPI on a month-on-month basis was too small to make any significant statistical suggestions.

The new nationwide CPI launched earlier this year was introduced to reflect the actual movement of prices at the micro-level and help policymakers like the RBI in better framing of decisions.

With the passage of the time, the government expects it to supersede the Wholesale Price Index (WPI) as the benchmark for measurement inflation.

Inflation, as measured by the WPI, stood at 9.78 per cent in August.

At the time of unveiling the new CPI earlier this year, the government had said it would continue the practice of giving the figures in the present form without quoting the inflation rate for one year.

These consumer indices include five major groups -- food, beverages and tobacco; fuel and light; housing; clothing, bedding and footwear; and miscellaneous items.