The labour bureau will unveil on Wednesday (October 21) a new series for consumer price index for industrial workers (CPI-IW), a measure of inflation used to calculate dearness allowance (DA) for government employees, wages for industrial workers and dearness relief for pensioners, an official said, requesting anonymity.
The new series will account for changing spending habits of the working class in the organised sector.
In the new series, the base year for calculating the CPI-IW will be updated from 2001 to 2016. The new series has been necessitated by changing consumption habits, relative prices of various commodities and spending patterns of the country’s workforce in regular jobs.
Also Read: Pandemic’s effect on lenders could stall shadow bank recovery in India
In any inflation index, the base year is the first year of an inflation index, with an index value of 100. Inflation indices of all other years is compared to the base year to see how prices vary. The percentage change in this index is what an inflation measure represents.
The new index will assign more weight to spending on services such as education, healthcare, housing, travel and transportation, as spending on these items have gone up, as compared to primary items such as food. The index will help economists, who calculate inflation, to reflect a more accurate picture of a working-class household’s costs.
“The revision is long overdue. Now, it is ready. The new series will be unveiled on October 21,” a labour bureau official said. Read from source….