The Federal Bureau of Statistics (FBS) prepares CPI, WPI and Sensitive Price Indicator (SPI). The 'base' of these indicators is changed from time to time. In 2006, the then Prime Minister directed for change in the base. A technical committee was notified, headed by Dr Rashid Amjad, Vice Chancellor of Pakistan Institute of Development Economics (PIDE), which has now completed the detailed reports on change of base of CPI and WPI. It will be "9th base change" of the indicators 2007-08.
The CPI prepared with 2000-01 as base, measured average in the consumer prices of a basket of 374 items, customarily purchased and consumed by the people. The index was based on a weighted system. The weights of commodities/items were derived from the family budget survey conducted in 2000-01 in 35 cities for various income groups.
The WPI is considered as a good estimator to measure the wholesale price level of commodities. The WPI series with 'base 2000-01' was being computed for a basket constituting 425 items, sold at primary level in selected markets of 18 cities. The weights of items were derived from the aggregate value of marketable for the items covered in WPI.
The technical committee accordingly reviewed the work undertaken by the FBS and is compiling the new CPI and WPI with respect to methodology, weights, composition of goods and services, regional coverage and other related issues. The main features of the new series of CPI and WPI with revised base 2007-08 are as follows:
CPI-basket of goods and services and their weights: A family budget survey was conducted by the FBS in 2007-08, covering 54,309 households in 65 cities to identify the revised list of goods and compute their weights. Based on the results of the survey, a revised list of 787 items was compiled, reflecting the latest consumption patterns. Examining the results, the committee finalised 40 urban centres for collection of prices. The committee also approved the relative weights of these items. The basis of consumption of weights is the aggregate of all five income groups. This is in line with Pakistan's previous practice, as well as regional system.
Classification of commodity Groups: A major change in new series with base 2007-08 is the adoption of the latest international classification developed by United Nations, ie " Classification Of Individual Consumption according to Purpose (COICOP)". Due to this, a number of groups and grouping of the items is different from the previous base 2000-01.
Selection of cities: The geographical coverage of the 2000-01 CPI was 35 cities, which has been increased to 40 cities in the new CPI. The selection of the cities has been made on statistical methods, giving proper representation to large cities (population of 500,000 and above), medium cities (population 50,000 to 100,000) and small cities (population below 50,000).
Income groups: In the CPI series with base 2000-01, the coverage in terms of income groups is as follows: (i) up to Rs 3000; (i) Rs 3001 to Rs 5000; (iii) Rs 5001 to Rs 12000; and (iv) above Rs 12000.
In the series with base 2007-08, the income groups have been divided into five income quintiles give as follows: Q-1 up to Rs 8000; Q-2 Rs 8001 to Rs 12000; Q-3 Rs 12001 to Rs 18000; Q-4, Rs 18001 to Rs 35000; and Q-5 above Rs 35000.
New approach to cover rent component: In the existing CPI with base 2000-01, the rent component was estimated through indices of building material and wages of labour. In the new series with base 2007-08, the rent component has been based on the actual rent survey. The rent survey has been conducted on 39,708 households for the base year. Now, regularly 6344 households are being surveyed for CPI on quarterly basis.
Publication of release of new CPI: The technical report has approved a tabulation plan, proposed by the FBS. The committee also advised that both series be released with new and old basis up to June 2011. However, from July, 2011 only new CPI with 2007-08 base will be released, and old series will be discontinued.
WPI: Basket of goods and their weights - A set of 463 items has been selected for the base 2007-08, in the light of production and sale of commodities in the wholesale markets. Three quotations of prices for each item are obtained from selected 21 markets/cities besides secondary data collected from manufactures, importers and distributors. Weights have been developed on aggregate value of marketing surplus of each item.
Classification of commodity group: A major change in new series with base 2007-08 is the adoption of the latest international classification of the United Nations "Central Product Classification Version 2( CPC, Ver. 2) Due to this the composition of commodity groups has changed from the previous base 2000-01.
The base weights of agriculture, forestry and fishery products 25.77 percent, food products, beverages and tobacco, textiles, apparel and leather products 31.11 percent, ores and minerals, electricity gas and water 12.04 percent, other transportable goods, except metal products, machinery and equipment 22.37 percent and metal products, machinery and equipment.
Selection of cities: Number of cities has been enhanced from 18 to 21 as recommended by the technical committee in order to extend the existing geographical coverage of WPI.