Consumer inflation at 5.84% in March

The government did not release headline retail inflation figures for April, citing data paucity due to lockdown restrictions even as it revised consumer inflation for March to 5.84% from a provisional 5.91% estimated earlier.

The National Statistical Office provided price movements of sub-groups in the Consumer Price Index for which it had reasonable amounts of data. It said price data collection through personal visits had been suspended from March 19 “in view of the preventive measures and announcement of nationwide lockdown by the government to contain spread of Covid-19 pandemic.”

Data was available mostly for food products, among which each sub-group from fruits and vegetables to sugar and confectionery showed an increase from March. The office retained the food inflation estimate at 8.76%.

“The price of only those items were included which have been reported from at least 25% of markets, separately for rural and urban sector, and constituted more than 70% weight of the respective sub-groups/groups,” the ministry of statistics and programme implementation said in a release on Tuesday.

Another caveat is that the all-India indices have been compiled using direct approach by considering a common market at the national level in both rural and urban sectors separately.

The NSO computes retail inflation based on prices from 1,114 urban markets and 1,181 villages through personal visits by field staff. However, price data for April was collected through telephonic enquiries and supplemented with information gathered during the personal purchase of field staff from 674 urban markets and 524 villages for commodities that were available and being transacted during the lockdown.

“In view of the limited transactions of products in the market in the month of April 2020, it has been decided to release the Price Movement of Sub-groups/Groups of CPI, following the principles of adequacy,” the ministry said.

Economists said the absence of data in several segments makes it hard to comment on the breakdown of inflation as transactions in certain services and many types of goods would have largely ceased.

“The food inflation numbers may be understated as at the ground level, retail prices were going at a premium of 10-120% due to lower supplies and higher delivery charges,” said Madan Sabnavis, chief economist at CARE Ratings.

According to Aditi Nayar, principal economist at ICRA: “The curtailed CPI data released by the CSO broadly confirms our expectation of a month-on-month rise in food prices driven both by seasonal factors as well as the temporary supply disruptions induced by the lockdown.”

“In the absence of transactions, prices would not have undergone a revision reflective of the extent of the demand shock. Accordingly, we expect a realignment of prices only once the economic activity resumes in various sectors to reflect the post-Covid demand-supply balance,” Nayar said.