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
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