Transcript CPI - Welcome to JPKE Website

Presentation
on
Consumer Price Index
(CPI)
Department of Statistics
Department of Economic Planning and Development
Prime Minister’s Office
Outlines

Introduction

Compilation of CPI

Dissemination of CPI

Uses and Users of CPI
Introduction

Consumer Price Index is produced by:
Consumer Price Statistics Section (CPSS)
Department of Statistics (DOS)
Department of Economic Planning and
Development (JPKE)
Prime Minister’s Office

CPI is produced monthly & annually
What is Consumer Price Index?

The CPI measures:

the changes in the price

of a fixed ‘basket’ of goods and services

purchased by the majority of the
households
Definition and Concepts

The CPI measures price changes from a designated reference
period known as base year period. The base year period of
current CPI is 2002 (2002=100).

The price of CPI basket in the base year period is expressed as an
index by assigning it a value of 100.0. The prices in other periods
are expressed as percentages of the prices in the base period


for e.g. if the price of basket has increased by 25 % since the base year,
then the index would be 125.0. Similarly, if the price has fallen by 5 %
since the base year, the index would stand at 95.0
Index is used because CPI covers a number of diverse items. To
calculate and interpret the average price of many different type of
items is complicated. CPI presented in index number form.
What’s in the CPI Basket?

CPI basket of goods and services only contains important
items commonly purchased by the majority of the
households in the country

CPI only contains items purchased for personal
consumption not for business or investment purposes (for
e.g., machinery & heavy equipment)

The selection of items to be priced for the CPI was based
on the results of Household Expenditure Survey (HES)

The current CPI 2002=100 is based on the results of HES
conducted in 1997/1998
Classification

CPI goods and services are classified into 10 Major Groups:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Food & non-alcoholic beverages
Clothing & footwear
Housing, water, electricity & maintenance
Household goods, services & operation
Transport
Communication
Education
Medical & health
Recreation & entertainment
Miscellaneous goods & services
1. Food & non-alcoholic beverages
(rice, cereals, meat, seafood, dairy products, oils, vegetable, fruits etc)
2. Clothing & footwear
(ready made clothes, clothing materials, tailoring chargers, shoes)
3. Housing, water, electricity & maintenance
(rental of house, fuel, water &electricity charges)
4. Household goods, services & operation
(furniture, carpets, audio & video equipment, kitchen appliances)
5. Transport
(purchase of new vehicle, spare parts, bus fare, air fare)
6. Communication
(mobile phone, telephone charges, postal charges)
7. Education
(school fees, stationery, newspaper, magazines, computer)
8. Medical & health
(medical treatment, dental treatment, medicines)
9. Recreation & entertainment
(sport equipment, toys & games, camera, membership fees)
10. Miscellaneous goods & services
(cigarettes, domestic services, personal care items)
Weights

Weights are assigned to CPI goods and services

Weights indicates the importance of the goods and services.
Some items are important than others

Prices changes for more important items should have a
greater influence on the CPI than less important items


For e.g. Price changes in food items or transport items should have a
big impact on the CPI than price changes in clothing and footwear
because household spend more on food and transport items
The current weights for CPI 2002=100 are based on the
results of HES conducted in 1997/1998
Distribution of Weights
Groups
1. Food & non-alcoholic beverages
2. Clothing & footwear
3. Housing, water, electricity & maintenance
4. Household goods, services & operation
5. Transport
6. Communication
7. Education
8. Medical & health
9. Recreation & entertainment
10. Miscellaneous goods & services
 Total
Weights
2,877
561
884
860
2,251
548
471
98
814
636
10,000
Distribution of Weights
Miscellaneous goods
& services
6%
Recreation &
entertainment
8%
Food & non-alcoholic
beverages
28%
Medical & health
1%
Education
5%
Communication
5%
Clothing & footwear
6%
Transport
23%
Household goods,
services & operation
9%
Housing, water,
electricity &
maintenance
9%
Compilation of CPI
(CPI 2002=100)
Price Collection Method

What to price?





All items listed in the CPI basket of good and services
Number of items: 557 items (247 food + 310 non-food)
Prices collected are transaction prices (price actually paid)
Regular, sales, promotion, offers, discounts prices recorded
What is the number of observations?



Number of price observations: 5, 428 prices
More prices for items with a large weights (e.g. food items)
Less prices for items with similar price movements (e.g.
newspaper, magazine, cigarettes)
Price Collection Method

How to price?

Price collection is done through personal visits or telephone

For items whose price fluctuate frequently (e.g. fresh fruits,
vegetables and fish), prices are collected 2 times a week

For items with a fairly stable price (e.g. clothing, furniture, motor
vehicles, airfares, tailoring, haircut), prices are collected monthly

For items with a very stable rate (water, electricity, school fees)
prices are collected once a year or as and when the charges change

Price collection is done consistently on the same day of the week
each month from the same outlet

The same item is priced every month so that ‘pure’ price changes are
recorded and not quantity and quality price changes
Price Collection Method

Where to price?



Prices collected from large and well-established outlets reasonably
popular located in densely populated areas
Collected from many different types of outlets
Collected from all the four districts
Zones
 Brunei Muara
 Tutong
 Belait
 Temburong
 Total outlets

:
:
:
:
:
No.
383
66
102
3
554
When to price?

Conducted from 1st until 3rd week of each month
Computation of CPI

Price data collected are checked and validated. Data
entered into excel and transfer to SPSS software for the
computation of CPI

CPI is calculated using the Laspeyres’ formula
In
=
∑ PnQo
x
∑ PoQo
Where :
Pn
Po
Qo
-
Current Price
Base Price
Base Quantity
100
Computation of CPI
Item
Ticket
Base
Price
B$
Base
Index
5.00
100.0
Current Price
Current Current
Price
Index
B$
5.25
?
x
100 = _____
x
100 = 105.0 (5%)
Index
Change
(%)
?
Base Price
$ 5.25
$ 5.00
The price of ticket has increased by 5 % with an index of 105.0 since the base year
Monthly CPI (Dec 2006)
Index
No
Major Groups
1
2
Overall Index
I
II
III
IV
V
VI
VII
VIII
IX
X
Food and non-alcoholic beverages
Clothing & footwear
Housing , water, electricity & maintenance
Household goods, services & operation
Transport
Communication
Education
Medical & health
Recreation & entertainment
Miscellaneous goods & services
Weight
% Change
Dec 06/ Dec 06/
Nov 06 Dec 05
Dec-05
Nov-06
Dec-06
3
10,000
4
103.1
5
102.8
6
102.4
7
-0.4
8
-0.7
2,877
561
884
860
2,251
548
471
98
814
636
101.7
95.4
98.7
93.5
107.3
89.2
98.1
99.9
129.1
102.6
101.8
94.8
96.9
94.3
106.4
88.4
98.0
100.5
128.2
104.6
102.1
87.5
96.9
92.7
107.1
88.3
98.0
100.9
127.8
104.3
0.3
-7.7
0.0
-1.7
0.7
-0.1
0.0
0.4
-0.3
-0.3
0.4
-8.3
-1.8
-0.9
-0.2
-1.0
-0.1
1.0
-1.0
1.7
CPI
2006 (Jan – Dec)
103.2
103.1
103
102.8
102.8
102.7
102.8
102.7
102.6
Index
102.6
102.4
102.4
102.4
102.3
102.2
102.2
102.1
102
102
101.8
101.6
101.4
Jan
Feb
Mac
Apr
Mei
Jun
Jul
Months
Aug
Sep
Oct
Nov
Dec
CPI
2007 (Jan - Jun)
103
102.8
102.8
102.6
102.6
Apr
Mei
102.6
Index
102.4
102.4
102.2
102.2
102.1
102
101.8
101.6
Jan
Feb
Mac
Jun
Jul
Months
Aug
Sep
Oct
Nov
Dec
Yearly CPI (2003 - 2006)
103
102.5
102.3
102.5
Per cent
102
101.5
101.2
101
100.5
100.3
100
99.5
99
2003
2004
2005
Year
2006
Inflation rate (2003 - 2006)
1.2
1.1
1
0.9
Per cent
0.8
0.6
0.4
0.3
0.2
0.2
0
2003
2004
2005
Year
2006
Computation of Inflation rate

Rate of Inflation: the percentage change in CPI from the
preceding month

For e.g. inflation rate for 2006
CPI 2006 – CPI 2005
x 100 = _____
CPI 2005
102.5
–
102.5
102.3
x 100 = 0.2 %
Dissemination
of
CPI
CPI Dissemination

CPI is published on monthly and yearly basis

Monthly CPI is produced within 21 working days
after the reference month (for e.g. CPI for July
released on 21 August 2007)

Press release in Borneo Bulletin, Media Permata,
Brunei Times, Pelita Brunei, Radio & TV

Brunei Economic Bulletin (quarterly report)

Key CPI figures are published in the JPKE website
(www.depd.gov.bn)
Press releases in local newspaper
Press releases in local newspaper
Uses and Users
of CPI
Uses of CPI



Macroeconomic indicator
 used to monitor levels and causes of inflation
Maintaining dollar values
 fixed payment (wages & social welfare benefits) can be
reduced over time when prices rise
 used to adjust payments to counter the effects of inflation
International Comparison
 used to compare the inflation rate with other countries
Users of CPI
Government agencies, private agencies, private companies,
researchers, students, general public etc
Problems & Solutions

Missing items
 Carry forward the last observed price for 3 months


Replaces with a new item that is comparable or of
similar quality in case the item still unavailable
Closed shop due to renovation, move in to new areas,
bankruptcy etc

Replace with the new outlets within the same zone
THANK YOU