Why in news?

The Ministry of Statistics and Programme Implementation (MoSPI) has changed the release time of retail inflation (CPI) and factory output (IIP) data from 5:30 pm to 4 pm on the 12th of each month. This adjustment aims to give more time for data analysis on the release day and aligns with the closing hours of India’s major financial markets.

What’ in today’s article?

• Consumer Price Index (CPI)
• Index of Industrial Production (IIP)
• Significance of CPI and IIP data
• Change in the timings for release of CPI inflation and IIP data

Consumer Price Index (CPI)

• CPI is a metric that measures retail inflation by collecting data on the prices of goods and services that are consumed by the retail population of the country.
• The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation releases CPI.
  • CPI is released for all-India and States/UTs separately for rural, urban and combined (national).
• Currently, CPI is calculated using 2012 as a base year.
• Items for the CPI basket of goods and services classified across categories.
  • Few of the categories are; food and beverages, clothing, housing, fuel and light, recreation and etc.
    • All categories are assigned weights (as shown in the diagram).
  • Currently, CPI is calculated by taking into consideration 299 items.

Index of Industrial Production (IIP)

• About
  • The IIP number measures the industrial production for the period under review, usually a month, as against the reference period.
  • There is a lag of six weeks in the publication of the IIP index data after the reference month ends.
  • It is currently calculated using 2011-2012 as the base year.
• Institution involved
  • NSO under the Ministry of Statistics and Programme Implementation (MoSPI) releases the IIP data.
• IIP Index Components
  • IIP is a composite indicator that measures the growth rate of industry groups classified under:
    • Broad sectors, namely, Mining (14.4%), Manufacturing (77.6%) and Electricity (8%)
    • Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods etc.
  • These Eight Core Industries mentioned in above section comprise 40.27 percent of the weight of items included in the IIP.

Significance of CPI and IIP data

• Consumer Price Index (CPI): Key Inflation Indicator
  • CPI tracks changes in the prices of goods and services purchased by households, serving as a key macroeconomic indicator of inflation.
  • It is widely used by governments and central banks for inflation targeting, monitoring price stability, and as deflators in national accounts.
  • Inflation, measured as the year-on-year change in CPI, indicates the rate of price increase for a specific basket of goods.
  • Currently, the CPI (combined) uses the base year 2012, updated from the base year 2010 in January 2015.
• Index of Industrial Production (IIP): Measure of Industrial Activity
  • IIP gauges the level of industrial production in an economy, reflecting short-term changes in the output volume of selected industrial products relative to a base period (currently 2011-12).
  • The IIP assesses industrial growth across three sectors: Mining, Manufacturing, and Electricity, along with use-based categories like basic goods, capital goods, intermediate goods, consumer durables, and non-durables.
  • It is monitored as a short-term indicator of industrial activity until the Annual Survey of Industries and National Accounts Statistics are released.

Change in the timings for release of CPI inflation and IIP data

• About the news
  • India's Ministry of Statistics and Programme Implementation is changing the release time for key economic data.
  • The Consumer Price Index and Index of Industrial Production will now be released at 4 pm on the 12th of each month.
  • This new time aligns with the closing of major financial markets in India. The ministry aims to enhance transparency and accessibility with this change.
    • The CPI and IIP indicators are essential for economic policy and market decisions.
    • If the 12th falls on a holiday, CPI data will be released the following working day, while IIP data will be released the prior working day.
• Why was the data release timing kept at 5:30 pm earlier?
  • In 2013, reports of data leaks led the Ministry to shift the release time of retail inflation and IIP data to 5:30 pm from July that year, to avoid influencing trading during market hours.
  • Prior to this, the data was released around 11-11:30 am, which significantly impacted forex and bond markets.
  • The change aligned with market closures, as forex and bond markets close at 5 pm.
    • While retail inflation data has always been released on a monthly basis, the wholesale inflation data was released weekly till December 2012.
    • Now, it’s released on the 14th of every month around noon.
• Concerns About New Timing’s Market Sensitivity
  • While the new timing coincides with stock market closing, analysts note that government bond and foreign exchange markets remain open until 5 pm, meaning the data could still impact active trading in these markets.
  • The Ministry emphasizes that the timing aligns with MoSPI’s commitment to transparency and accessibility.