RBI invites comments on Seasonal Movements in Inflation

The Reserve Bank of India has today placed on its website - Report of the Internal Technical Group on 'Seasonal Movements in Inflation' for public comments. Comments on this Report may be sent to the Director, Forecasting Division, Department of Statistical Analysis and Computer Services, Reserve Bank of India, C-8, 6th Floor, Bandra Kurla Complex, Bandra (East), Mumbai 400051. Comments can also be sent via email (helpfddesacs@rbi.org.in)

The Reserve Bank of India had set up an Internal Technical Group on 'Seasonal Movements in Inflation', to examine the pattern of seasonal behaviour of inflation and gauge the inflationary pressures in Indian economy. The Group analysed, in detail, different ways of presentation of inflation, viz., annual point-topoint inflation based on weekly Wholesale Price Index (WPI), inflation based on moving average of 4/12/24/52 weeks of WPI, fixed base, month-over-month, etc.

The Group also reviewed merits and demerits of practices followed by some other countries on inflation presentation. Further, the Group examined the nature of seasonality in WPI at aggregate and disaggregate level, identifying the commodities in WPI basket showing high seasonality. Similar analysis was carried out to examine the nature of seasonality in various Consumer Price Indices(CPIs).

The Group has concluded that all the price series in India (viz., WPI, CPI) have peak/trough months around the same time of the year mainly due to seasonality in food prices. The analysis revealed that, inflation rate based on annual point-to-point basis, supplemented with month-over-month and fixed base (using seasonally adjusted price series) provide better signal regarding price dynamics in the Indian economy. 

Sourced From: Reserve Bank of India