How PBS Calculates CPI in Pakistan?

Pakistan Bureau of Statistics calculates CPI of Pakistan.

Pakistan is comprised of 138 districts. The PBS takes 71 markets of 35 urban centers in these Districts to calculate consumer price index. Keeping in view the overall population, 35 markets are taken from the biggest province, Punjab.

Initially, (in 1948-49) the consumer price index was calculated from markets in three cities; Karachi, Lahore, and Sialkot. However, since then the Federal Bureau of Statistics has tried to make it more representative by selecting more markets, more categories of items and more sections of classes.

The Federal Bureau of Statistics had been categorizing the population among four income groups starting from Rs.3000/-, Rs.3001/- to Rs.5000/-, Rs.5001/- to Rs.12000/- and Rs.12000/- to above since 2000-2001 – base year to calculate the CPI. The Federal Bureau of Statistics claimed that it is easier to measure ‘price impact’ of different commodities on the people in various income groups.

In December 2011, the government of Pakistan established Pakistan Bureau of Statistics. "The former Federal Bureau of Statistics, the Agriculture Census Organization, the Population Census Organization and the Technical Wing of Statistics Division have been merged in Pakistan Bureau of Statistics

 (Official Website)."

Market Basket of Goods

The Pakistan Bureau of Statistics takes a market basket of 374 items in ten significant groups; food & beverages, apparel, textile and footwear, house rent, fuel and lighting, household, furniture & equipment, transport and communication, recreation and entertainment, education, cleaning, laundry, and Medicare. The diversified list of items in the basket is an attempt to include different income groups to calculate consumer price index.

Weights of Different Items

Item Group

Food and Beverages:


Apparel, Footwear and Textile:


House Rent:


Fuel and Lighting:


Household, Furniture and Equipments:


Transport and Communication:


Recreation and Entertainment:


Education:


Cleaning, Laundry and Personal Appearance:


Medicare


Total:

Weight

40.34


6.10


23.40


7.29


3.29


7.32


0.83


3.45


5.88



2.07


100

Data Collection

The PBS has stationed its employees in 35 districts to collect price data of different items for the basket in different dates of the month. Data about apparel, fuel, lighting, footwear, and textile is collected from 1st to 3rd of every month. During the next three days, the data about Household, Furniture & Equipment, etc. and Transport & Communication is calculated. From 7th to 10th of every month, the data about Recreation, Entertainment & Education Cleaning, Laundry & Personal Appearance & Medicare is collected. The employees of the PBS go to the market and purchase food and beverages from 11th to 14th of every month. It is not clear why data for last the remaining 14/15 days is not being collected.

The price collectors get four quotations of each item from different shops in the market. The average price of these four quotations is taken as the representative price of that item in a particular market. An average price of that item in all selected markets is considered as national level price. The data collection operation is supervised by the senior officers in each selected District. The national level analysis is done at the headquarters and in case of any doubt or confusion the price collectors are contacted directly.

Use of Laspeyres' Formula

The Pakistan Bureau of Statistics (PBS), applies Laspeyre’s formula to calculate consumer price index (CPI) (Statistics n.d.).

ln = Σ (Pn/Po) x wi x 100
Σ wi

Where ln = CPI for the nth period
Pn = price of an item 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.

CPI Increase in 2012

In May 2012, consumer price index in Pakistan rose by 12.3 percent compared to 11.3 percent during the previous years. The national daily English newspaper NEWS reported on June 02, 2012:

"During May 2012, prices of food and non-alcoholic beverages went up by 11.24 percent, alcoholic beverages and tobacco by 11.64 percent, clothing, and footwear prices soared 16 percent, housing water, electricity and gas fuels 10.8 percent, health care charges 12 percent, transportation 17.1 percent, education 12.2 percent over May 2011."

Another English newspaper DAWN reported about the increase in CPI in 2012:

"According to Finance Minister Dr. Abdul Hafeez Sheikh, while releasing the Economic Survey of Pakistan 2011-12 on Thursday, inflation measured by CPI had maintained a steady decline over the past three years and stood at 10.8 percent in 10 months of the current year while it was 13.8 percent last year."


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