SB in the process of rebasing CPI

Monday, December 17, 2018

The new base year base for Botswana Consumer Price Index (CPI) will now be December 2018 and the rebased CPI will be published in March 2019.

This was said by Statistician General, Dr Burton Mguni on the 13th December, 2018 at Botswana Consumer Price Index (CPI) Rebasing Consultative Workshop. The main aim of the workshop was to share with stakeholders the proposed basket and have their inputs before publishing the rebased index as well as for them to understand and appreciate the processes involved in the rebasing of the CPI.

The Consumer Price Index (CPI) which is an economic indicator that provides a general measure of changes in prices of consumer goods and services purchased by households is compiled and published by SB every month on the 15th and it is produced in compliance with the Special Data Dissemination Standard (SDDS). The inflation rate is also computed from the CPI.

The primary data source for constructing the CPI basket and weights is Botswana Multi Topic Household Survey (BMTHS), which has a module of household income and expenditure.

The CPI is used for many different purposes, such as being one of the important inputs in the formulation and revision of socio-economic and monetary policies; adjustment of wages and salaries in many sectors; adjustment of some government benefits and adjustment of contracted payments such as salaries and contract prices.

The current Consumer Price Index has a base year of September 2016, whose weights were reviewed using 2009/2010 Botswana Core Welfare Indicator Survey (BCWIS).

Statistics Botswana carried out BMTHS from November 2015 to October 2016 and it is now necessary to review the CPI basket and weights using this new information.

Using the same basket of goods and fixed weights over a long period of time is not considered sound practice. Weights in a consumer price index have to be changed to reflect changing consumption patterns. Consumption patterns change in response to longer term price movements, changes in preferences, and the introduction or displacement of goods or services hence the term CPI rebasing, says Dr Mguni.

He explained that CPI rebasing allows us to have a common reference point so that we are talking about the same time.