SB rebases consumer inflation
Isaac Pinielo | Friday November 11, 2016 15:56
The rebased CPI is an update of the current measure of consumer price increases and economic growth to factor in changes in priorities and provide a more accurate view of the general economy.
During a consultative CPI rebasing workshop, SB deputy statistician general, Dabilani Buthali said although the rebasing of the CPI was delayed, it has to be done every five years to keep it abreast with changing household consumption patterns over time.
He pointed out that periodic data from the household income and expenditure surveys are a key input in rebasing the CPI. “Notwithstanding the foregoing, Statistics Botswana is rebasing the CPI using the 2009/10 Botswana Multi-topic Household Survey (BMTHS) data,” Buthali said. He noted that the current Botswana CPI series has a base period of September 2006 which is being revised to a base period of September 2016.
He added that the subsequent rebasing of the CPI will be within the recommended five years, using data from the current BMTHS.
Explaining the rebasing, acting manager of national accounts and prices, Phaladi Labobedi said CPI rebasing is a process of relating items prices in the CPI basket to the current consumption pattern, that is, to come with CPI weights that represent the new consumption patterns. “The accuracy of weights to represent current expenditure patterns decreases as the length of time increases from the weight reference period,” he said.
Labobedi also said the national accounts expenditure estimates are used to adjust the weights of products, which experienced under-reporting. About the trade data, he said imports data is used to adjust weights of products such as tobacco and alcohol which suffer significant cases of under-reporting.
He noted that product classification is critical for compilation of CPI and hence SB has adopted the classification of Individual Consumption by Purpose (COICOP) for regional and international comparison. “COICOP was first established for System of National Accounts (SNA1993) to provide the structure for classifying household consumption expenditure,” Labobedi said.
He said the objective of the basket selection process is to ensure inclusion in the basket of those goods and services that represent the greatest share of expenditure within a group.
“A 0.01% was used as cut off for selection of items or products to be included in the basket. In an effort to incorporate International Comparison Programme (ICP) items, SB has modified and included some items in the basket,” he said.
According to Labobedi, for rice, 5kg was changed from 1kg, chicken liver per kg replaces chicken necks, sliced cheese 200 grammes (single packet) replaces cheddar cheese per kg.
Develop and Print 36-exposure colour film replaced with digital prints while Kodacolor II 36-exposure film 100 ASA replaced with digital camera.
The new items added are macaroni 500g, oats 500g, second hand car (Toyota Corolla 1.4), air fare, economy single, Gaborone-London(UK), Tablet PC, cellphone charger (Nokia/Samsung), Freight/Courier cost of 0.5kg parcel, Gaborone to F/town, union’s monthly subscription fee, fees for legal services (initial consultation for will and trust), dentist: extraction of a molar without complications, and USB flash drive of 4GB.