You must have wondered why inflation numbers released by the government were almost zero, when your expenses were shooting up and you spent more for the same thing than you would have earlier? Now, the revision in the way inflation is calculated will alter the discrepancy.

Inflation reflects changes in price levels from time to time and is an indicator of the cost of living. Inflation for the week ended October 3, 2009, was 0.92%.

In a move that will reflect better numbers, the Cabinet Committee on Economic Affairs has approved the proposal to release inflation data on a monthly basis. The base prices that inflation numbers will now consider are those in 2004 as against the earlier comparison with 1993 prices.

On why the monthly release of data was considered, commerce minister Anand Sharma, said on Monday, "The response (to price change every week) is poor, particularly from the manufacturing sector. On a monthly basis, the response is bound to be better, reflecting the true position."

Why was 2004 selected? "The base year should be normal (i.e. A stable year) in respect of economic activities like production, trade and their prices. It should not suffer from business cycles," the office of the Economic Adviser stated in the notes on the changes.

Proper alignment of the base year will smoothen sharp fluctuations in price movements and will ensure consistency, the notes said.

Presently, the inflation numbers on the basis of the wholesale price index (WPI) are measured weekly.

After the announced revision, the government will release two sets of inflation data - weekly data with respect to primary articles and fuel items as well as comprehensive data on a monthly basis. "The monthly outlook is more stable. Weekly reporting tends to be volatile and subject to revision. More time is likely to result in a better sample," Rupa Rege Nitsure, chief economist at Bank of Baroda, said.

Will there be a huge shift in inflation figures? Dharmakriti Joshi, director and principal economist, Crisil, said, "Its very difficult to say whether inflation numbers as per new composition and base year will be higher or lower. But this impact (change in base year) will make inflation data more reliable, accurate and representative of todays realties."

But the most awaited change is that in the weightage of various goods in the wholesale price index, which will be released by mid-November, based on suggestions of a working group set up, which is chaired by Planning Commission member Abhijit Sen

(With inputs from Sachin Mampatta amp; Nitin Shrivastava)