Reasons for Advancing CPI Inflation and IIP Data Release Timings and Potential Challenges

Source: This post on Reasons for Advancing CPI Inflation and IIP Data Release Timings and Potential Challenges has been created based on the article “Why have timings for release of CPI inflation and IIP data been advanced, and the likely problems with this change” published in Indian Express on 8th November 2024.

Why in news?

Recently, the Ministry of Statistics and Programme Implementation (MoSPI) has advanced the data release time to 4 pm to provide more time for stakeholders to access and analyze the data on the day of release.

Why this change has been made?

1. The new timing aligns more closely with the closing hours of major financial markets in India, allowing market participants to review the data without impacting after-market hours significantly.

2. Commitment to Transparency: MoSPI aims to enhance transparency and accessibility in data dissemination by shifting the release timing, facilitating better decision-making.

Historical Context of Previous Release Timings

1. Pre-2013 Schedule: Retail inflation and factory output data used to be released around 11-11:30 am on the 12th of every month until June 2013.

2. Leakage Concerns: Due to data leaks before the official release time, the release was moved to 5:30 pm in July 2013 to occur after the close of forex and government bond markets at 5 pm.

3. Consistency with Market Closures: The 5:30 pm release time minimized market sensitivity to data, as key financial markets were closed, reducing potential volatility from mid-trading data releases.

Potential Issues with the New 4 pm Release Time

1. Increased Market Sensitivity: The 4 pm timing could impact government bond and foreign exchange markets, which remain open until 5 pm. The release during open market hours might lead to higher market volatility.

2. Timing Overlap with Trading: Although stock markets close by 4 pm, other sensitive markets might experience sudden shifts in trading activity due to the mid-session data release.

Importance of CPI and IIP Data

1. Consumer Price Index (CPI): It measures changes in the price levels of consumer goods and services, serving as a key indicator for inflation and price stability. It supports inflation targeting and monitoring by governments and central banks.

2. Index of Industrial Production (IIP): It reflects industrial activity and growth by measuring production changes across sectors like Mining, Manufacturing, and Electricity. It serves as a short-term industrial growth indicator until comprehensive annual data is released.

UPSC Syllabus: Indian Economy