USERS PRODUCERS WORKSHOP PRESENTATION ON PRICE STATISTICS BY ABDUL AZEEM SAHITO DIRECTOR PRICE STATISTICS SECTION FBS, KARACHI

Consumer Price Index

Consumer Price Index 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 is generally accepted as a measure of inflation in the country.

WHAT CPI MEASURES?

It measures Price changes of fixed market basket of goods and services of constant quality and quantity. It tells how much cost of living has risen or fallen due to price changes irrespective of changes in consumer behaviour or quality of goods. It does not reflect the cost of living or in house hold consumption expenditure as such but only the influence of price fluctuation on the trend.

Selection of Markets/Outlets and Cities

Items are selected on the basis of Family Budget Survey Markets are selected through retail and wholesale trade survey. Outlets are selected on transaction value basis. Cities are selected on population basis Stratified sampling are used for selection of cities.

Weights for CPI

The results of Family Budget Survey provide the average percentage expenditure(Consumption pattern) of Households on each item/each commodity group and for each income group for the cities covered in CPI. These average percentage expenditures on item and commodity groups are called weights and are being used in computation of the CPI. Po x qo Wi = ------------- x 100

Po x qo
Example: 1. Total Expenditure: Rs. 3000, 2. Expenditure on Wheat Flour:- Rs. 100 3. % of Expenditure on Wheat flour = (100/3000)*100 = 3.33 Weight of Wheat flour = 3.33%

Commodity Groups Wise Items and Weights C.P.I (2000-01) Commodity Group Weights Items
01. Food, Beverages & Tobacco 02. Apparel, Textile & Footwear 03. House Rent 04. Fuel & Lightening 05. House Hold, Furniture & Equipment etc. 06. Transport & Communication 07. Recreation & Entertainment 08. Education 09. Cleaning, Laundry & Personal Appearance 10. Medicines/Medicare TOTAL 40.34 6.10 23.43 7.29 3.29 7.32 0.83 3.45 5.88 2.07 100.00 124 42 01 15 44 42 16 24 26 29 374

COVERAGE OF CITIES AND MARKETS IN BASE YEAR FOR CPI 2000-2001

Name of City No of Markets Name of City No of Markets

Punjab
1. Islamabad (Federal Capital Area) *
2. Rawalpindi * 3. Lahore * 4. Gujranwala * 5. Faisalabad * 6. Multan * 7. Jhelum 8. Sialkot * 9. Sargodha * 04 06 07 01 02 03 01 01 01

10. Jhang
11. Okara 12. D. G. Khan 13. Bahawalpur * 14. Bahawalnagar 15. Mianwali 16. Vehari 17. Attock 18. Samundari

01
01 01 01 01 01 01 01 01

* Cities also included in SPI cities

COVERAGE OF CITIES AND MARKETS IN BASE YEAR FOR CPI 2000-2001

Name of City No of Markets Name of City No of Markets

Sindh
19. Karachi * 20. Hyderabad * 21. Sukkur * 22. Nawabshah 23. Larkana * 24. Mirpurkhas 25. Shahdadpur 26. Kunri 13 04 02 01 01 01 01 01

N.W.F.P.
27. Peshawar * 28. Mardan 29. Abbottabad 30. D. I. Khan 31. Bannu * 03 01 01 01 01

Balochistan
32. Quetta * 33. Khuzdar * 34. Turbat 35. Loralai 02 01 01 01

Total Cities = 35

Total Markets = 71

* Cities also included in SPI cities

INCOME GROUPS OF CPI

1. Up to Rs. 3000.00 2. Rs. 3001.00 - 5000.00 3. Rs. 5001.00 12000.00 4. Above Rs. 12000.00

Time table for Collection of Prices

Part-I Food, Beverages Tobacco
Part-II Apparel, Textile and Foot Wear Fuel and Lighting Part-III House Hold, Furniture & Equipment Transport & Communication Part-IV Recreation, Entertainment & Education, Cleaning, Laundry & Personal Appearance & Medicines Part- VII WHOLE SALE PRICE Part-VI S.P.I Daily Prices of 18 items

Monthly
Monthly

11-14 of each month

01-03 of each month 04-06 of each month 07-10 of each month

Monthly

Monthly

Monthly Weekly Daily

13-15 of each month Each Thursday Daily

FORMULA USED FOR COMPUTATION OF CPI

Laspeyre's formula as given below is being used for the computation of CPI. (Pn/Po) x wi In = --------------------x 100 wi Where In = 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 / Po x Qo wi = Total weight of all items.

EXAMPLE FOR COMPUTATION OF CPI

ITEM UNIT BASE PRICE (Po) PRICE IN MAR, 06 (Pn) WEIGHT (Wi) Pn / Po Po / Pn x Wi

Moong Pulse Mash Pulse Masoor Pulse Gram Pulse

Kg Kg Kg Kg

29.91 45.01 36.23 28.99

47.61 52.72 44.03 31.50

0.2230 0.2017 0.2214 0.4272 1.0733

1.5918 1.1713 1.2153 1.0866

0.3550 0.2363 0.2691 0.4642 1.3246

( Pn/Po) x Wi
Index = -------------------------------- x 100 Wi 1.3246 I = -------------------------- x 100 = 123.41 1.0733

COVERAGE FOR VARIOUS CPI BASE YEARS

ITEMS
OCCUPATIONAL CATEGORY

1948-49 = 100 1955-56 = 100 1969-70 = 100 1975-76 = 100 1980-81 = 100 1990-91 = 100 2000-01 = 100
Industrial Industrial Clerical Industrial Commercial Government Industrial Commercial Government Industrial Commercial Government Industrial Commercial Government Self Employer & employed 460 9 25 63.13% 61 112240 1. Upto Rs. 1500 2. Rs. 1501 - 4000 3. Rs. 4001 - 7000 4. Rs. 7001 - 10000 5. Above Rs. 10000 All categories combined

NUMBER OF ITEMS 202 NUMBER OF COMMODITY 4 4 4 GROUPS NUMBER OF CITIES 4 4 12 % OF TOTAL URBAN 57% POPULATION NUMBER OF 28 MARKETS NUMBER OF 22624 QUOTATIONS INCOME GROUPS 1. Up to Rs 68-130 1. Up to Rs. 105-130 1. Up to Rs. 300 2. Rs. 218-332 2. Rs. 301-500 3. Rs. 501 - 1000 4. Above Rs. 1000

357 4 12 57% 28 39984 1. Up to Rs. 600 2. Rs. 601-1500 3. Rs. 1501 - 2500 4. Above Rs. 2500

464 9 25 63% 65 116928 1. Up to Rs. 1000 2. Rs. 1001-2500 3. Rs. 2501-4500 4. Above Rs. 4500

374 10 35 65% 71 106500 1. Upto Rs. 3000 2. Rs. 3001 - 5000 3. Rs. 5001 - 12000 4. Above Rs. 12000

Limitation of CPI
1) Coverage is limited 2) Only covers Urban Centres 3) Prices may have different trend in rural & urban centres. 4) Rent is computed through construction input items index instead of rent survey. 5) It measures partially inflation not total consumers expenditure.