Business News of Monday, 14 January 2013

Source: B&FT

Inflation index to be rebased in March

The Ghana Statistical Service (GSS) says it will start using a revised Consumer Price Index (CPI) basket to calculate inflation from March.

The review of the basket is to reflect changes in household expenditure patterns over time. The resulting new CPI index will have 2012 as the base year, the GSS said. The current index uses 2002 as the base year.

It added that the review is a regular exercise conducted every five years, and is not informed by disputations over inflation figures published by the Service.

“We are trying to make the basket accommodate current happenings. This is because expenditure patterns have changed and there are some items in the basket which have become obsolete,” acting Government Statistician, Philomena Nyarko, told B&FT in an interview.

“We are finalising our data and so by March we should be implementing the rebased figures,” she added.

The new basket will comprise 272 commodities, up from the current basket’s composition of 242 items, after additions and subtractions were made.

New weights will be assigned to the commodities to reflect their relative importance in current household consumption.

Transport and communication are among items that will see higher weightings as they now make up a bigger share of household spending than previously.

This should see non-food items, like transportation, communication and health account, for almost 60 percent of goods in the basket.

Mr. Asuo Afram, Head of Price Statistics at the GSS, explained that that the GSS arrived at the new basket and weights after studying the Ghana Living Standards Survey 5 (GLSS 5) and national accounts, and after broad consultations with the Bank of Ghana, the finance ministry and other stakeholder groups.

He said the rebasing of the CPI basket is to meet the international standards. “Just like the rebasing of the country’s GDP estimates, the review of the way inflation is calculated is also to ensure that the rate better reflects what pertains on the ground.”