Page 160 - Special Topic Session (STS) - Volume 3

STS538 Rameshwar S.
Table 4: A Comparative table showing the salient features of CPIs compiled at
National Level follows :
Salient Feature CPI(UNME) CPI(IW) CPI(AL) CPI(RL)
1. Source of weights: FLS 1982- FLS 1999- 1983 (NSS 38th
Family Living Survey 83 2000 Round)
(FLS)/ Consumer
Expenditure Survey
2. Base year of the 1984-85 2001 1986-87 1986-87
series
3. No. of centres/ 59 urban 78 600 600
villages centres centres villages villages

4. No. of markets/ 1022 289 1461 1461
quotations
5. No. of items in the 146-345 175-200 260 260
consumption
basket
6. Index 59 78 20 20
released for centres & centres & centres & centres &
all-India all-India all-India all-India
The periodicity of all Indices are monthly and time lag is within one month.

4. Discussion and Conclusion
Typically, the number of items in the consumption basket of the CPI varies
between 100-400. The sample of markets used was 2-3 in case of small island
countries, 20-40 in case of African countries, and hundreds to thousands in
case of big countries like India.
Elementary aggregate index were calculated using arithmetic (AM) or
geometric mean (GM). It should be noted that AM is always greater than or
equal to a GM. The formulae most commonly used in compiling price indexes
are the fixed base-weighted Laspeyres.
Some experts have urged that there was no need to conduct expensive
HIES frequently to revise the weights of the CPI consumption basket. Scott3
showed in his paper that in case of Ghana by keeping nine group weights
equal (worst possible weighting), annual inflation (January 1989 over January
1988) was 26.4% compared with 26.2% with the published weighting.
The Economist publishes Big Mac Index based on one item and also
computes Purchasing Power Parity (PPP) based on the index, so why should
we worry for collecting prices on hundreds of items.
One CPI does not fit for all. The consumption basket is different for urban
and rural consumers; it is not the same for industrial, agricultural and rural
workers as in case of India, and hence there are three different CPIs. We can

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