• CPI:

INTRODUCTION: Consumer Price Index (CPI) is the main measure of

price changes at the retail level. It measures changes in the cost of buying a
representative fixed basket of goods and services and generally indicates
inflation rate in the country.

BACKGROUND: The Consumer price index was computed for the first time
with 1948-49 as a base for industrial workers in the cities of Lahore,
Karachi and Sialkot only. Continuous efforts have been made, since then, to
make CPI more representatives by improving and expanding its scope and
coverage in terms of items, category of employees, cities and markets.
Accordingly, the CPI series were computed with 1959-60, 1969-70, 1975-
76, 1980-81 and 1990-91 as base years. At present, the CPI is being
computed with 2000-01 as base year. The details about modus operandi of
computation of index are given in the subsequent paragraphs.

COVERAGE OF CITIES AND SELECTION OF MARKETS: The CPI

series cover 35 urban centers of Pakistan. Depending upon the size of the
city, 1 to 13 markets have been selected from where the prices are obtained.
The markets have been chosen keeping in view the volume of sales,
assuming that majority of the category of employees for CPI make the
purchases from these markets. Thus, the prices represent the actual
consumer prices. The number of markets covered in 35 cities is 71.

BASKET OF GOODS AND SERVICES :

The current CPI covers 374 items in the basket of goods and services, which
represent the taste, habits and customs of the people. This basket has been
developed in the light of results generated through the Family Budget
Survey conducted by the FBS in 2000-01. The basket of goods and services
comprises on 10 major groups (2000-2001 base.

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No.of items in each basket.
There are at least 374 retail items in CPI. Main items are stated below.

And there are 12 baskets in CPI. Following are 25 highest weight CPI
items.

1. Onions (87.03%) 2. Tomatoes (24.85%)

3. Chicken farm (17.76%) 4. Sugar (11.70%)
5. Pulse Moong (11.25%) 6. Wheat flour (10.08%)
7. Gur (8.26%) 8. Potatoes (6.09%)
9. Wheat (5.28%) 10. Besan (4.98%)
11. Vegetables (4.51%) 12. Fish (3.91%)
13. Pulse gram (3.52%), 14. Jewellery (3.01%)
15. Sweetmeat & nimco (2.92%) 16. Gram whole
(2.75%) 17. Hosiery (2.61%) 18. Meat (2.12%)
19. Pulse mash (2.01%) 20. Rice
(1.87%) 21. Mustard oil (1.71%) 22. Doctor’s fee
(1.66%). 23. Readymade food (1.60%) 24. Maida
(1.36%) 25. Tailoring charges (1.29%)

• No of groups in each basket

There are atleast 12 groups in CPI,s basket. They are given below.

1. Food & beverages

2. Non-perishable food items

3. Perishable food items

4. Apparel, textile & footwear

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 5. House rent

6. Fuel & lighting

7. Household, furniture & equipment etc.

8. Transport & communication

9. Recreation & entertainment

10.Education

11. Cleaning, laundry & personal Appearance

12.Medicare

Frequency of CPI along date of collection:

Name of items frequency date of collection

Part-I Monthly 11-14

each month
Food & beverage
Part-II
Apparel, Textile and
Footwear, Fuel & Lighting Monthly 1-3 each
month
Part-III
Household, Furniture &
Equipment etc.
and Transport & Communication monthly 4-6 each
month

Part-IV
Recreation, Entertainment &
Education Cleaning,
Laundry &
Personal Appearance & monthly 7-10 each
month
Medicare

Names of 10 major cities covered by CPI:

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Lahore 07
Faisalabad 02
Rawalpindi 06
Gujranwala 03
Multan 01
Sialkot 01
Islamabad 01
Sargodha 04
Jhang 01
Bahawalpur 01

• WPI:

INTRODUCTION
The Wholesale Price Index (WPI) is designed to measure the directional
movements of prices for a set of selected items in the primary and wholesale
markets. Items covered in the series are those which could be precisely
defined and are offered in lots by producers/manufacturers. Prices used are
generally those, which conform to the primary sellers realization at ex-
mandi, ex-factory or at an organized Wholesale level.
BACKGROUND
The WPI initially was computed with 1959-60 as base. Since then,
continuous efforts have been made to make the WPI more representatives by
improving and expending its scope and coverage in terms of commodities,
quotations/markets, etc. Accordingly, WPI series were computed with 1969-
70, 1975-76,1980-81 and 1990-91 as base years. Presently, the WPI is
being computed with 2000-01 as base.

BASKET OF GOODS

METHODOLOGY OF DATA COLLECTION

The method of data collection is the same as explained in CPI.

FREQUENCY OF DATA COLLECTION

The wholesale prices are collected by the Statistical Assistant of
Regional/Field offices from 13th to 15th of each month.
SUPERVISION OF PRICE DATA COLLECTION

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As explained in the CPI
EDITING/CHECKING OF PRICE SCHEDULES AT HEADQUARTER
As explained in the CPI.
CALCULATION OF AVERAGE PRICES AT MARKET/CITY LEVEL
For each commodity 4 quotations from different shops of a market are
obtained. Average of these 4 quotations is taken as a representative price
for the commodities in the market/city.

WEIGHTS The value of marketable surplus has been used for deriving the
weights of items. The value of marketable surplus is the value of item
available for sale in the wholesale market, which is equal to the total value
of production less consumption by producer plus imports, minus export if
any. For example, the weights are derived at item level (Aggregate value of
items in base year) and average price of all the markets for the particular
item is used for computation of WPI.
• No. of items in each basket.
WPI covers 106 commodities and 425 items.Some of the Items
and groups are given below respectively.

1.Onions (90.43%) 2. Chicken (13.28%)

3. Potatoes (12.62%) 4. Sugar refined (11.78%)
5.Bajra(10.74%) 6. Vegetables (9.12%)
7. Gram whole (8.76%) 8. Transports (8.14%)
9. Tomatoes (7.89%) 10. Moong
(7.63%) 11. Gur (7.39%) 12. Wheat
flour (6.99%) 13. Besan (6.05%)
14. Wheat (5.41%), 15.Mustard/rapeseeds (5.62%) 16.
Gram split (4.84%) 17. Rice (4.77%)
18. Mustard & rapeseed oil (4.40%), 19. Cosmetics (4.14%),
20.Bricks (4.00%), 21. Paints & varnishes
(3.66%) 22. Cotton (3.47%), 23. Cotton seeds
(3.46%) 24. Meat (3.30%) 25. Tubes (3.19%)

• GROUPS

1. Food

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 2. Raw Materials

3. Fuel, lighting & lubricants

4. Manufactures

5. Building Materials
• Frequency of WPI along with frequency

The statistics are calculated and recorded on 13-15 of each month.

Names of cities covered by WPI:

1. Karachi
2. Lahore
3. Faisalabad
4. Rawalpindi
5. Hyderabad
6. Multan
7. Gujranwala
8. Peshawar
9. Sialkot

• SPI:
INTRODUCTION
The Sensitive Price Indicator (SPI) is computed on weekly basis to assess
the price movements of essential commodities at short intervals so as to
review the price situation in the country. The SPI is being presented in the
Economic Coordination Committee of the Cabinet (ECC).

BACKGROUND
Sensitive price indicator was originally computed with 1969-70 as base
which was subsequently switched over to 1975-76, 1980-81 and 1990-91 as
base year. Presently, the SPI is being computed with base 2000-2001. The
methodology for computing SPI is explained in the next paragraphs.

METHODS OF DERIVATION OF WEIGHTS

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 Computation of weights of SPI are the same as that of the CPI . In the base
2000-2001, fresh developed weights through Family Budget Survey
conducted in 2000-2001 are being used. The weights for each groups are
combined by taking simple average of weights of 17 cities for each item.
Then, all income groups are combined at Pakistan level taking simple
average of weights of 4 income group.

PERIODICITY OF PRICE COLLECTION Prices used in SPI relate to

Thursday of each week. The field staff collects retail prices of 51 consumer
items by personally contacting the shopkeeper of the markets covered in the
SPI. Prices are obtained by the headquarters on telephone/fax from the
concerned Field/Regional Offices on the same day.

FORMULA USED FOR COMPUTATION OF SPI

The formula used is the same as was explained in CPI.
INCOME GROUPS AND OCCUPATIONAL CATEGORIES :
As the consumption pattern of individuals depends on their income level and
occupation, the population under observation is therefore, categorized
under various income groups and occupational categories. This serves to a
certain the impact of price changes of various commodities on their
purchasing ability

INCOME GROUPS & OCCUPATIONAL CATEGORIES:

In the base 2000-2001, the categories of employees have not been
considered and only following four (4 ) income groups are covered:

Up to 3000RS
From 3001 to 5000 Rs
From 5001 to 12000 RS
Above 12000RS

Names of some cities covered by SPI:

1. Islamabad 4
2. Rawalpindi 6
3. Gujranwala 1
4. Sialkot 1
5. Lahore 7
6. Faisalabad 2

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Formula Used For Computation Of Index :
Laspeyre's formula as given below is being used for the computation of
CPI.

ln = Σ (Pn/Po) x wi x 100
Σ wi

ln = CPI for the nth period

Pn = price of an item in the in the nth period
Po = price of an item in the base period
wi = weight of the ith item in the base period = Po x qo / Σ PoxQo
Σwi = Total weight of all items.

PRICE CHANGES AND INFLATION RATE:

The above formula shows that the CPI is a summary measure of weighted
average of relative prices (current prices over base period prices expressed
in percentage). Weight for each CPI item has been developed from Family
Budget Survey and represents the percentage expenditure share of a
specified item in the total expenditure of the household on all CPI goods and
services. The impact of price changes of various items on the CPI is
affected by their weights. Items with higher weights have greater impact on
CPI than those with lower weights. The common man or non-professional
approach of calculating inflation rate is generally based on the simple
average of price changes instead of the weighted average.
• USES OF EACH PRICE INDEX:
Use of CPI:

i. Calculation of inflation rate:- Inflation rate = (ACPIcy – ACPIpy) x 100

ACPIpy

ii. G.D.P. deflator :- Nominal G.D.P. x 100 = Σ Pn x

Qn x 100
Real G.D.P. Σ Pn
x Qn

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iii. Purchasing power of money:- 1/cpi*100

iv. Deflation of per Capita income:- current per capita income/cpi*

100

• USES OF SPI:
As stated above in CPI.