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April 9, 2019

Rebasing of consumer price index approved

Business

April 9, 2019

ISLAMABAD: Government on Monday approved the implementation of updated base year for the calculation of consumer inflation, a move that has been delayed for over one year and which might ensure renewal of the list containing obsolete items and proper rural-urban representation.

The decision was taken during the 17th meeting of the governing council of Pakistan Bureau of Statistics (PBS) presided over by the Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar. New base will be published after an approval by the Economic Coordination Committee.

The council approved the proposal of rebasing the consumer price index (CPI) to FY-2015/16 from FY-2007/8. The rebasing was long overdue and the exercise was completed in December 2017 and a technical committee cleared it for presentation in the council. Under the new base, PBS will compile urban consumer price index, rural consumer price index and national consumer price index on monthly basis.

The rebasing was scheduled to be completed in June 2017; however, the previous government gave one year grace period till June 2018 to complete the process due to population census exercise. PBS currently compiles urban consumer price index to determine inflation in the country on monthly basis, covering only urban commodities.

Sample size of households has been reduced to 26,688 in 2015/16 from 54,309 in 2007/8 in the rebasing exercise. Number of cities for calculating the CPI was cut to 35 from 40, while number of items was slashed to 356 items in urban areas from 487 items. The government decided to add 27 items from rural areas/markets to give them representation in the CPI basket.

Officials said the PBS would come up with CPI figures on new and old methodologies till June-end June. But the new rebasing figure would be done with effect from the next fiscal year of 2019/20. Bakhtyar, who is the chairman of the council, emphasised the need for authentic data collection for better policy and decision making.

“PBS should devise a mechanism to deliver more reliable official figures relating to economy, population, agriculture, trade and other areas,” he was quoted in a statement. The minister stressed the need to ascertain the real impact of gas and electricity price increases as well as prices of essential food items on consumers falling in different categories.

The meeting was told that poor consumers falling in the lowest slab have not been affected much by increase in prices of gas and electricity due to protective cover given by the government.

The meeting was apprised that fifth meeting of the governing council of PBS decided to rebase the national accounts committee and price statistics after every 10 years. Subsequently, a technical committee was constituted which recommended changing the base.

The decision came close on the heels of shifting the PBS into the domain of ministry of planning. Renowned economists, including Rashid Amjad and Hafeez Pasha advocated autonomy of the PBS.

On appointment of PBS chief statistician, the planning minister directed the officials to expedite the process for smooth functioning of PBS. —

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