Crisil launches core inflation indicator

The agency said the index can supplement the existing indicators that influence the RBI8217;s interest rate decisions.

8220;CCII is especially relevant in today8217;s uncertain and volatile economic environment,8221; it added.

Releasing the index,Crisil said,8221;Our forecast shows that CCII will drop to around 4 per cent in 2012-13 from nearly 7 per cent in 2011-128243;.

This decline,it said,creates an environment conducive for interest rate cuts,though its timing and quantum will also depend on other factors such as oil prices and the government8217;s actions towards fiscal consolidation.

RBI,which is scheduled to announce the annual credit policy on April 17,has hiked interest rates 13 times since March,2010 in its bid to tame inflation.

Inflation which remained high during most of 2010 and 2011 has started showing signs of moderation in the recent months.

The government releases Wholesale Price Index WPI based inflation on a monthly basis,in addition to the Consumer Price Index CPI based price figures.

The agency will release the CCII every month using WPI data published by the Ministry of Industry and Commerce.

CCII includes processed food and metal products to take into account the second-round of impact of supply shocks and it excludes base metal prices which are directly influenced by international prices,Crisil said.

A good core inflation measure should exclude the impact of temporary movement in overall inflation,the rating agency said. CCII,excludes this component in its calculation,it added.