Document 6582310

What is the Consumer Price Index (CPI)?
 the average change over time in the prices of:
 consumer items .
 goods
 services
that people buy for day – to – day living.
 It combines economic theory with sampling and
other statistical techniques and uses data
collected monthly to produce a timely measure
of average price change.
Cont.
 CPI provides an estimate of the price change
between any two periods.
 The CPI follows the prices of a sample of items in
12 main categories of consumer spending—such
as food, clothing, shelter, and medical service.
Why is the C P I Important?
economic indicator-
• measure of inflation, effectiveness of
economic policy
adjusting income payments
• wage increases.
deflator of other economic series
• price changes
• inflation-free versions
CPI calculation
∑PnQo
∑PoQo
X100
Example
Items
Weight
Base
current
CPI
Dura
0.982
4.84
11.03
2.24
Dura Fetarita
1.173
3.20
8.07
2.96
0.069
4.12
9.29
0.15
Millet (Dukhn)
3.314
5.59
12.08
7.16
wheat
0.864
5.77
12.34
1.85
local barley
0.012
1.07
1.53
0.02
Imported barley
0.015
1.29
1.75
0.02
Egyptian rice ( Imported )
0.608
2.11
4.80
1.39
Yellow maize
(Dura Shami)
Inflation rates
Month
CPI 2008
CPI 2009
Inflation
January
106.0
118.0
11.2
February
106.6
118.4
11.1
March
106.6
118.2
10.9
April
109.6
119.0
8.5
May
110.7
120.5
8.9
June
115.8
127.2
9.9
July
119.4
131.2
9.8
August
122.5
135.3
10.4
September
121.0
136.6
12.9
October
118.6
133.9
12.9
November
117.8
134.9
14.5
December
116.9
132.7
13.4
Why Update the C P I?
 Updating the CPI basket items, and their
weights; represents the current consumption
patterns made by Sudanese households.
 The item’s weight is the share of total household
expenditure on the item to total households’
expenditure on all items.
Cont.
 Used as deflator for GDP in Services Sectors for
example : Education , Health …ect.
 change the base year according to the GDP year
using the formula :
 GDP Current year
 Changed CPI
CPI basket
 The last update of the Sudanese CPI basket
items was in 2007 based on the HBS that
conducted in 2007. The previous basket of the
CPI was based on 1978.
Weights
 reflects contribution to total expenditures of
households.
 determines the impact that its price change will
have on the overall index.
CPI Calculation
 Laspeyres formula is used for the calculation.
 CPI basket consists of 663 items and the consumer
basket consists of 944 items. cut of 0.005
 temporarily missing and seasonal items are treated
by distributing their weights at the other items in
the same expenditure group.
 Prices for fruits, vegetables, fresh meat, and fish
food are collected on a weekly basis .other items are
collected once a month.
 The base year is 2007 for all the 15 northern states.
 CPI is compiled for each state and for Sudan at the
levels: state/ urban, state/ rural, and state.
CPI STRUCTURE
 Step1: Data/ Prices entry process - geographic
areas and geographic weights.
∑PnQo
∑PoQo
*100
Cont.
 Step2: Calculation of relative prices and new
weights, by dividing the current price by base
year price. In addition, the new weight is
calculated by multiplying the relative price by
the base year weight .
 Step3: To compute the minor group level, new
weights for sub-minor groups within the minor
group are aggregated and divided by the base
year weights . The same procedures are done to
calculate the Index at the major group level and
finally for the general Index.
CLASSIFICATION SYSTEM
COICOP
Sudan
12 Divisions
12 Divisions
47 Groups
41 Groups
117 Classes
12 Classes
Used as deflator for GDP in Services Sectors for
example : Education , Health …ect.
change the base year according to the GDP year
using the formula :
GDP Current year X 100
Changed CPI
COICOP Code - Expenditure group
Consumption Group
Total
01 - Food and non-alcoholic beverages
Sudan/
Urb
100.0
Sudan/
Rur
100.0
Sudan
100.0
43.4
62.0
52.9
01.1 - Food
41.3
59.0
50.3
01.1.1 - Bread and cereals (ND)
8.6
13.3
11.0
01.1.2 - Meat (ND)
9.8
13.8
11.8
01.1.3 - Fish and seafood (ND)
0.8
0.4
0.6
01.1.4 - Milk, cheese and eggs (ND)
4.8
4.8
4.8
01.1.5 - Oils and fats (ND)
2.3
3.6
3.0
01.1.6 - Fruit (ND)
3.3
4.3
3.8
01.1.7 - Vegetables (ND)
6.8
11.9
9.4
01.1.8 - Sugar, jam, honey, chocolate and confectionery (ND)
3.6
4.8
4.2
01.1.9 - Food products n.e.c. (ND)
1.4
2.0
1.7
01.2 - Non-alcoholic beverages
2.1
3.0
2.5
01.2.2 - Mineral waters, soft drinks, fruit and vegetable juices (ND)
0.9
1.0
0.9
CPI weights for the main groups and minor groups for food
Sudan/
Urb
Sudan/
Rur
Sudan
03 - Clothing and footwear
4.2
4.9
4.5
04 - Housing, water, electricity, gas and other fuels
18.3
10.2
14.2
05 - Furnishings, household equipment and routine household maintenance
8.3
5.5
6.9
06 - Health
1.1
0.9
1.0
07 - Transport
9.8
6.9
8.3
08 - Communication
2.3
1.1
1.7
09 - Recreation and culture
2.7
1.8
2.2
10 - Education
3.5
2.0
2.7
12 - Miscellaneous goods and services
3.1
2.2
2.6
Consumption Group
CPI weights for the main groups Khartoum
old Weight
M
Code
Description
Weight
10000
Total Food,Drink & Tobacco
0.6378
20000
Total Clothing,Shoes
0.0281
30000
Total Rent And Fuels
0.1057
40000
Total Household Opern
0.0368
50000
Total Health Care
0.0090
60000
Total Transport,Etc
0.0601
72000
Total Entertainment
0.0172
74000
Total Education
0.0146
80000
Total Miscellaneous
0.0907
Total Weight
1.0000
000
n0
Fe 8
b0
M 8
ar
-0
Ap 8
rM 08
ay
-0
Ju 8
n0
Ju 8
l-0
Au 8
g0
Se 8
p0
O 8
ct
-0
No 8
v0
De 8
c0
Ja 8
n0
Fe 9
b0
M 9
ar
-0
Ap 9
rM 09
ay
-0
Ju 9
n0
Ju 9
l-0
Au 9
g0
Se 9
p0
O 9
ct
-0
No 9
v0
De 9
c09
Ja
Consumer Price Indices 2008 -2009
140.00
135.00
130.00
125.00
120.00
115.00
110.00
105.00
100.00
cpi
Monthly Inflation Rates for Northern States 2008-2009
25.0
20.0
15.0
10.0
5.0
0.0
Ja
n08
Fe
b08
Ma
r08
A
pr08
Ma
y08
Ju
n08
J
ul08
Au
g08
Se
p08
O
ct08
No
v08
De
c08
Ja
n09
Inf
Fe
b09
Ma
r09
A
pr09
Ma
y09
Ju
n09
J
ul09
Au
g09
Se
p09
O
ct09
No
v09
De
c09