COMPARISON OF CONSUMER PRICE INDEX BASKET BETWEEN CURRENT
BASE YEAR AND NEW BASE YEAR IN MYANMAR
By
Nyaung Tai
A call paper submitted in
Requirement for ESCAP
Asia-Pacific Economic Statistics Week
Seminar Component
Bangkok, 2 – 4 May 2016
at the
Central Statistical Organization (CSO)
5 April 2016
CONTENTS
CONTENTS...................................................................................................................
ii
LIST OF TABLES..........................................................................................................
iii
LIST OF TABLES..........................................................................................................
iv
ACRONYMS...................................................................................................................
v
ABSTRACT...................................................................................................................
vi
Chapter 1 INTRODUCTION........................................................................................
1
1.1
Background…………………………………………………………….
. 1
1.2
Objectives of the Study……………………………………………….
1
1.3
Organization of the Study…………………………………………….
2
Chapter 2 LITERATURE REVIEW……………………………………………………..
3
2.1
Concepts and definition……………………………………………….
4
2.1.1
Consumer Price Index (CPI)……………………………….
4
2.1.2
Inflation………………………………………………………
5
2.1.3
CPI Scope and Weights……………………………………
6
2.1.4
CPI basket and Classification……………………………..
7
Chapter 3 DATA AND METHODOLOGY……………………………………………..
9
3.1
Regional Data………………………………………………………….
9
3.2
Selecting Commodities and Outlets…………………………………
10
3.3
Price Collection……………………………………………………….
10
3.4
CPI Weighting Pattern………………………………………………..
11
3.5
Compilation Method…………………………………………………..
13
Chapter 4 DISCUSSION………………………………………...………………………
16
4.1
Consumer Price Index and Inflation………………………………...
Chapter 5 CONCLUSION AND RECOMMENDATIONS……………………………
16
20
5.1
Conclusion...................................................................................
20
5.2
Recommendations………………………………………………….
20
References…………………………………………………………………………………
ii
21
LIST OF TABLES
Table 2.1 Comparison of weights between 2006 base year and 2012 base year…….
6
Table 2.2 Comparison of CPI basket between 2006 base year and 2012base year...
8
Table 3.1 Components and weights of the CPI basket…………………………………… 11
Table 3.2 Differences method between current CPI and new CPI…………………….
14
Table 4.1 Comparison of CPI& Inflation between 2006 current base year and 2012
new base year…………………………………………………………………….
16
Table 4.2 Comparison of monthly CPI& Inflation between current base year and new
base year of 2015…………………………………………………………………
Table 4.3 Base year comparison within ASEAN Countries …………………………….
LIST OF FIGURES
iii
17
19
Figure 4.1 Comparison of monthly CPI& Inflation between current base year and
new base year of 2015………………………………………………………..
ACRONYMS
ASEAN
Association of South East Asian Nations
CES
Consumer Expenditure Survey
COICOP
Classification of Individual Consumption according to Purpose
iv
18
CPI
Consumer Price Index
CSO
Central Statistical Organization
FPI
Fisher Price Index
HIES
Household Income and Expenditure Survey
LPI
Laspeyres’ Price Index
MNPED
Ministry of National Planning and Economic Development
PPI
Paasche Price Index
RAP
Ratio of Arithmetic Mean Prices
Abstract
This paper studies the comparison of Consumer Price Index (CPI) basket between
current base year and new base year. The Central Statistical Organization (CSO) is
collecting the prices of selected commodities (158) items for computing states/regions and
union levels of CPI with Laspeyres’ Price Index (LPI) formula on the 2006 base year that is
using simple average method. The selected commodities includes (83) food items and (75)
non-food items are taken as representative consumer market basket items from Household
Income and Expenditure Survey (HIES) that used stratified three stages random sampling
and collected data on commodities and services (436) items from 32000 households of 80
townships in December 2006. CPI 2006 base year covered for only urban household. CSO
v
is trying improving CPI to change new 2012 base year that consists of selected commodities
(274) items from 32669 households in 82 townships of HIES by using Classification of
Individual Consumption according to Purpose (COICOP), the standard international
classification as well as present classification of items adopted in the existing CPI numbers
compiled at both of urban and rural level. New CPI base year will be used Modified
Laspeyres’ Price Index. The selected commodities are food (108) and non-food (166) to
compute CPI by using geometric mean method. In the market economy, prices are basically
determined by forces of supply and demand. As price have influence on the behavior of the
economy, and impact on the real income of the people, a number of price indexes are
constructed and used in economic analysis. It shows the changes in prices of specific
consumer items in a representative consumer market basket related to a base period which
represents a fairly normal period insofar as possible.
Key words: Laspeyres Price Index, Modified Laspeyres’ Price Index, Simple Average
Method, Geometric Mean Method, Improving CPI, Inflation
vi
CHAPTER 1
INTRODUCTION
1.1
Background
The world is enjoying the fruits of modern technology in many ways which are based on
the quality of statistics for economic sector. Economic statistics is very important for a country.
The statistics indicates the real economic conditions of a country and economic statistics (or)
indicators are showing how much economic growth can be reflected on people of the country.
Myanmar has been moving towards a free market-oriented economy, since late 1988. In
the market economy, prices are basically determined by forces of supply and demand. As prices
have influence on the behavior of the economy and impact on the real income of the people, a
number of price indexes are constructed and used in economic analysis. Among them, CPI is a
widely referred one that draws the attention of policy-makers, decision-makers, entrepreneurs
and investors and which also concerns the general public. It shows the changes in prices of
specific consumer items in a representative consumer market basket related to a base period.
The CSO had used differing years such as 1958, 1965,1972,1978,1986, 1997 as the
base period in CPI computation over time. CPI measures changing of prices based on nationwide HIES which conducted once in five years. CPI is used as a principal measure of Inflation in
Myanmar. CPI and Inflation are key economic indicators; CSO computes monthly CPI for the
users at varied levels, i.e., union, regions/states and cities and submits the findings to the higher
authorities for necessary action, within a week from the end of month reported.
1.2.
Objectives of the study
HIES survey uses to conduct for using CPI base year. CSO is now using 2006 base year
for computing CPI based on HIES which was conducted in December 2006. When conducting
the 2006 HIES, sampling frame drown out form administrative records released by Ministry of
Home Affair. In this survey, three stages stratified random sampling had used. These were as
1
follows: 1st stage for townships, 2nd stage for wards and village tracks and 3rd stage for
households. In this survey, 32000 households in 80 townships were monitored.
When compiling the CPI 2006-based, Union price is a weighted average price of these
80 townships. The fluctuation of CPI depends on its weight and prices. In 2006-based, there are
only 158 commodities including 83 food items and 73 goods and services, and the commodities
are mostly domestic products. Therefore, Items lists are out of date and it is need to repair
modernized. Moreover, the order of item does not in line with the COICOP and it can’t compare
with the statistics of international agencies. Above mentioned problems, CSO need to change
the new CPI base-year. As the objectives of this paper, 3 parts are shown as follows;
(1) To overcome the problems of 2006 base CPI
(2) To standardize in line with international level
(3) To reflect the current situation consumption
1.3.
Organization of the study
This paper consists of five chapters. The first chapter comprises introduction,
background, objectives, and paper organization. Chapter 2 describes literature review, which
states previous empirical evidence of compilation of the CPI in a country. Chapter 3 explains
using data and methodology. Chapter 4 shows discussion of the results. Finally, Chapter 5
concludes the paper by showing the comparison result of the 2006 base year and 2012 new
base year in Myanmar.
2
CHAPTER 2
LITERATURE REVIEW
The price section of CSO under the Ministry of National Planning and Economic
Development (MNPED) is collecting, compiling, computing, and dissemination the price of
selected commodities for states/regions, and Union levels of CPI and Inflation. The price section
has been summiting daily CPI for Yangon, Naypyitaw (Pyimana, Lawei, and Tatkone), gold
prices and US $ value to higher Authority. And also, 15 states/ regions, Yangon City, Mandalay
City, and Naypyitaw Council of CPI and inflation for weekly, monthly, and yearly are presented.
Price section has been using 2006 base year to computing CPI with LPI formula. CPI basket
weights based on HIES, 2006 December. In “Base Year Revision of Consumer Price Index
(CPI)”, Republic of India Ministry of Statistics and Programme Implementation (2015) writes that
the base year of this series of CPI is 2010=100 and weighting diagrams are based on the
results of Consumer Expenditure Survey (CES) 2004-05.
Current commodities’ price reflects on individual consumption by households. Changes
in price level of goods and services in Myanmar that most people buy for their day-to-day
consumption. Therefore, our CPI baskets need to reflect the consuming of Myanmar’s
households. New CPI with a base year of 2012 will meet with our needs. CSO is now working
on an updated consumer price index to measure retail inflation that would have a lesser
weighted for food prices. Veronica & Irene (2010) showed that the rate of change in the CPI,
which captures the changes in the characteristic Filipino household cost of living based on the
movements of the prices of items in the basket of goods and services consumed.
The current base year is using CPI basket (158) items in accordant with Myanmar
consumption pattern in 2006. CSO is now trying improving CPI that is to change new 2012 base
year with COICOP that consists of (12) heading group. The international standard classification
of COICOP that is being followed the geometric mean, instead of arithmetic mean being used in
3
the old series, of the price relatives with respect to base prices would be used to collect CPI
basket item (Republic of India Ministry of Statistics and Programme Implementation,2015).
2.1.
Concepts and definition
2.1.1
Consumer Price Index (CPI)
The CPI represents prices paid by consumers or households. Prices for a basket of
goods are compiled for a certain base period. Price data for the same basket of goods is then
collected on a monthly basis. This data is used to compare the prices for a particular month with
the prices from a different time period. The CPI measures the average change in the retail price
of goods and service purchased and consumed overtime.
CPI can calculate the following of formulas are:
P1i =Price of item i in the current period
P0i =Price of item i in the base period
Q1i = Quantity of item i in the current period
Q0i = Quantity of item i in the base period
n
= Total items
Σ
= Sum n term of multiply quantity and price
LPI = Laspeyres’ Price Index
4
PPI = Paasche Price Index
iP t
= Price of item i in comparison period t
iP 0
= Price of item i in comparison period 0
iw 0
= Expenditure on item i in base period 0, divided by expenditures on all items in
base period 0
iw t =
Expenditure on item i in comparison period t, divided by expenditures on all items
in comparison period t
∏
2.1.2
= Indicates the product operator
Inflation
The Inflation can be measured by computing percent change in current month CPI from
month to month or percent change from the same month of the prior year; however such
computation may produce misleading rate should the months under study happen to be extreme
period showing sharp fall or rise in prices. Therefore, annual rate of inflation is computed by
taking 12 month of year, according to the following formula:
bi = CPI for the current period
ai = CPI for the corresponding month of the previous year
2.1.3
CPI scope and weights
The current CPI covers the consumption of urban households of Myanmar and is based
on the HIES 2006 reflecting December average consumption. The new CPI 2012-based will
5
cover both urban and rural private household consumption based on the HIES 2012. The
December average consumption per urban and rural households was used to derive total
consumption of all households in the regions/states. As total expenditure was measured in
December 2012 with prices of that period, the weights were price-updated to current price level
using the current indices. For new products; the index of a link product was used to proxy the
price change of the new product. The regions/states level consumptions were used to receive
the total union consumption. Table (2.1) presents the comparison of weights between 2006
base year and 2012 base year, which have food items in the higher weights than other items.
Table 2.1 Comparison of weights between 2006 base year and 2012 base year
Code No.
Items Group
2006=100
2012=100
01
Food And Non-Alcoholic Beverages
62.32
58.51
02
Alcoholic Beverages, Tobacco
2.14
1.65
03
Clothing And Footwear
1.82
3.23
04
Housing, Water, Electricity, Gas And Other Fuels
9.70
8.07
05
Furnishings, Household Equipment And Routine
Household Maintenance
1.92
2.34
06
Health
1.59
2.13
07
Transport
7.91
10.13
08
Communication
09
Recreation And Culture
0.88
1.02
10
Education
1.67
2.15
11
Restaurants And Hotels
5.67
5.95
12
Miscellaneous Goods And Services
4.40
3.21
1.62
Source: Price Section, CSO
6
2.1.4
CPI basket and classification
The new CPI introduces the UN COICOP classification. The classification is used
internationally and makes it possible to make international comparison of inflation on more
detailed level. The current CPI includes 158 products and services, 83 food items and 75 nonfood items. The new CPI has 274 products and services, 108 food items, 166 non-food items
including goods and services. There are new 116 items in the index, for example new and used
cars, mobile phones and mobile phone charges and computers…etc. When constructing the
CPI 2006-based, both of purchased and non-purchased items are included. But in 2012-based,
non-purchased items are excluded from total expenditure. In table (2.2) there is a comparison of
weights between 2006 base year and 2012 base year.
7
Table 2.2 Comparison of CPI basket between 2006 base year and 2012 base year
2006=100
Sr.no
Commodity Group
I
II
2012=100
No. of
Consumer
items
Food
1. Rice
2. Oils
3. Meat, Fish& Eggs
4. Others
83
1
4
25
53
Non-Food
75
Commodity Group
Food
1.
No. of
Consumer
items
108
Food and Non-Alcoholic
Beverages
Non-Food
108
166
1.
Clothing and
apparel
15
1.
Alcoholic beverages,
Tobacco
12
2.
House rent and
repairs
8
2.
Clothing and Footwear
21
3.
Fuel and Light
10
3.
Housing, Water, Electricity,
Gas and Other Fuels
19
4.
Miscellaneous
Goods
42
4.
Furnishings, Household
Equipment And Routine
Household Maintenance
32
(a) Education
(8)
5.
Health
10
(b) Medicine
(5)
6.
Transport
18
(c) Conveyance
(9)
7.
Communication
3
(d) Cleansing and
Toilet
(8)
8.
Recreation And Culture
13
(e) Other
(12)
9.
Education
2
10.
11.
Total
158
Restaurants And Hotels
Miscellaneous Goods And
Services
15
21
274
Source: Price Section, CSO
8
CHAPTER 3
DATA AND METHODOLOGY
3.1.
Regional Data
In the current CPI the indices are compiled in township level. And also, CSO is
computing CPI and Inflation for union, states and region levels. The new CPI will be compiled in
states/regions level and 3 major cities (Yangon, Mandalay and Naypyitaw) and Union level. The
Yangon, Mandalay and Naypyitaw region indices are compiled excluding the cities. Therefore,
union level consists of states/regions (15) and (3) major cities, which are total of (18) townships.
3.2
Selecting Commodity and Outlets
In selecting the items as CPI basket, it depends on consumption of households that
spend more on some items and less on the others. A total of 274 varieties are included in the
CPI basket, 108 items for food and 166 items for non-food including goods and services. They
are classified into 12 main divisions based widely on the COICOP. In the CPI 2012 base, some
new products come to include which were not included in 2006-based such as automobile,
motorcycle, computer, cell phone, call charges etc. Outlets were chosen depend on total
number of households within a township. Total outlets, therefore, among the cities were not
same. The total number of outlets selected for pricing is 258 and observation prices are about
70,692.
3.3
Price Collection
The current CPI prices are collected on a weekly basis from 80 townships, 4 outlets in
each township. The weekly average price of township is calculated. Average price of state is
receives as an average of these township averages. Also the union level average price is
calculated as non-weighted average of township averages. The upper level index is then
achieved as weighted average of these lower level averages of averages.
9
In the new CPI prices will be collected from 82 townships. Number of outlets in one
township depends on the number of households in the township. In biggest townships, there are
7 outlets and in the smallest townships there is 1 outlet. The prices will be collected only once a
month/outlet, but in region/state level all weeks of the month are covered.
Individual outlet the prices are collected at the same week of the month. In total there
are 258 outlets in the sample. For homogenous products, e.g. Rice Emata, only one price per
outlet is collected, for more heterogeneous product, e.g. Mobile phones, two to three prices per
outlet is collected. Some prices that are same in the whole union, e.g. electricity, are centrally
collected and the same index is used for all states/regions.
3.4
CPI Weighting Pattern
In compilation of the CPI, weights are required to reflect the relative importance of each
item in the basket, that is, their share as a proportion of total household expenditure. In driving
the CPI weight, 15 states and regional and 3 major cities were compiled, and Yangon,
Mandalay and Naypyitaw region weight were constructed excluding the cities. Weights of Union,
state and regional level are shown in Table (3.1).
Table 3.1 Components and weights of the CPI basket
Component Weight
All Item
Food and Non-Alcoholic Beverages
Alcoholic Beverages, Tobacco
Clothing and Footwear
Housing, Water, Electricity, Gas and Other Fuel
Furnishing, Household Equipment,
and Routing Household Maintenance
Health
Transport
Communication
Recreation and Culture
Education
Restaurants and Hotels
Miscellaneous Goods and Services
Source: Price Section, CSO
10
Union
Kachin
State
Kayah
State
Kayin
State
Chin
State
58.51
1.65
3.23
8.07
2.34
64.12
1.16
2.93
7.34
2.27
57.38
3.86
4.60
7.19
4.10
58.83
2.43
4.14
5.78
2.61
65.56
1.20
3.67
9.60
2.41
2.13
10.13
1.62
1.02
2.15
5.95
3.21
2.35
9.04
1.02
0.92
2.28
3.62
2.95
2.04
9.93
1.69
0.92
1.78
3.28
3.23
2.32
9.16
1.21
1.04
2.20
6.03
4.26
3.95
4.79
1.02
0.87
1.20
2.96
2.78
Table 3.1 Components and weights of the CPI basket Cont.’s
Component Weight
All Item
Food and Non-Alcoholic Beverages
Alcoholic Beverages, Tobacco
Clothing and Footwear
Housing, Water, Electricity, Gas and Other Fuel
Furnishing, Household Equipment,
and Routing Household Maintenance
Health
Transport
Communication
Recreation and Culture
Education
Restaurants and Hotels
Miscellaneous Goods and Services
Saging
Region
Tanintharyi
Region
Bago
Region
Magwe
Region
Mandalay
Region
61.55
1.37
3.16
5.79
54.24
3.31
2.65
10.92
59.46
1.66
4.12
8.15
61.21
2.19
2.46
6.93
59.91
1.26
3.06
5.95
2.69
1.96
11.15
0.96
1.15
2.13
4.44
3.65
1.35
1.94
12.00
1.85
1.58
1.19
5.76
3.21
2.29
2.56
8.77
1.15
1.21
1.86
5.86
2.91
2.67
2.20
7.58
1.35
0.81
1.98
7.39
3.21
2.05
1.69
12.40
1.34
0.86
2.19
6.35
2.93
Mon
State
Rakhine
State
Yangon
Region
Shan
State
Arawaddy
Region
58.18
1.13
3.55
9.18
59.05
4.21
2.97
9.99
54.64
1.28
3.22
8.61
59.63
1.76
3.38
8.67
57.91
2.15
3.74
11.20
1.65
2.86
7.05
1.61
0.86
2.73
7.83
3.36
2.72
1.37
4.25
1.12
1.04
2.34
7.39
3.54
2.48
2.56
10.48
2.50
0.95
2.12
7.73
3.42
2.50
1.59
11.74
1.85
1.09
2.16
2.92
2.70
2.69
1.76
8.14
1.47
0.82
1.60
4.57
3.95
Source: Price Section, CSO
Component Weight
All Item
Food and Non-Alcoholic Beverages
Alcoholic Beverages, Tobacco
Clothing and Footwear
Housing, Water, Electricity, Gas and Other Fuel
Furnishing, Household Equipment,
and Routing Household Maintenance
Health
Transport
Communication
Recreation and Culture
Education
Restaurants and Hotels
Miscellaneous Goods and Services
Source: Price Section, CSO
Component Weight
Naypyitaw
Region
Yangon
City
Mandalay
City
Naypyitaw
City
57.52
1.21
4.50
7.76
3.08
2.85
10.33
1.67
54.32
0.60
2.48
8.90
1.97
2.68
11.31
2.75
52.65
0.32
2.64
5.83
1.06
1.20
21.89
2.09
54.12
1.16
3.63
7.20
2.67
3.35
11.19
2.86
0.54
2.30
5.38
2.86
57.52
1.29
2.77
8.19
2.74
54.32
1.05
2.43
6.81
2.02
52.65
0.63
3.13
6.04
4.01
54.12
All Item
Food and Non-Alcoholic Beverages
Alcoholic Beverages, Tobacco
Clothing and Footwear
Housing, Water, Electricity, Gas and Other Fuel
Furnishing, Household Equipment,
and Routing Household Maintenance
Health
Transport
Communication
Recreation and Culture
Education
Restaurants and Hotels
Miscellaneous Goods and Services
Source: Price Section, CSO
11
3.5
Compilation Method
The current 2006 base year has been computing CPI by using the following Laspeyres’s
formula:
P1i = Price of item i in the current period
P0i = Price of item i in the base period
Q1i = Quantity of item i in the current period
Q0i = Quantity of item i in the base period
n
= Total items
Σ = Sum n term of multiply quantity and price
The international agencies are using geometric mean to compute CPI. But, Myanmar is
using Arithmetic mean/Simple Average Method for computing CPI. Therefore, CSO is trying to
change improving CPI by using geometric mean according to international standard of the
COICOP.
In the new index at the micro-level (one product in one region) a geometric mean of
price changes from previous month is calculated. The index for current month is received by
multiplying the previous month index with this change. The new 2012 base year will be
computing CPI by using the following Modified Laspeyres’s formula:
𝑖
𝑖
𝐼𝑡𝑖 = 𝐼𝑡−1
∗ √𝜋
𝑝𝑡𝑖
𝑖
𝑝𝑡−1
, where
𝐼𝑡𝑖 is an index of product i in month t,
𝑖
𝐼𝑡−1
is an index of product i in month t-1,
𝑝𝑡𝑖 is price of product i in month t and
𝑖
𝑝𝑡−1
is price of product i in month t-1
12
To receive the upper level indices and the Union index, the weighted average of these
micro-level indices calculated.
𝐼𝑡 = ∑𝑖 𝑤𝑜𝑖 ∗ 𝐼𝑡𝑖 , where
𝐼𝑡 is index for month t and
𝑤𝑜𝑖 is weight of product i in base period 𝑤0𝑖 =
𝑝0𝑖 ∗𝑞0𝑖
𝑝0 ∗𝑞0
.
Table (3.2) shows that differences method between current CPI 2006 base year and
new CPI 2012 base year. Current CPI need to change improving method and methodology to
develop computing new CPI by using international standard.
Table (3.2) Differences method between current CPI & new CPI
Current 2006 Base Year
New 2012 Base Year
Total items are 158
Total items are 274
Food items are 83
Food items are 108
Non Food items are 75
Non Food items are 166
32000 households in 80 townships
32669 households in 82 townships
Using simple average/ratio of arithmetic mean
prices method
Will be used geometric mean method
Only urban HHs covered
Both of urban and rural HHs will be covered
Laspeyres’ price index
Modified Laspeyres’ price index
It Will be used COICOP
Source: Price Section, CSO
13
CSO is computing the union level of current CPI 2006 base year by fixed choosing of the
(158) items. Although, the new CPI 2012 base year is based on the expenditure of states/
regions, which is identified biggest or smallest of the expenditure for townships. Therefore, each
of townships cannot be same CPI basket for collecting items.
In Myanmar, there is also interest on average prices. In the current average prices are
calculated as mentioned above in the index methodology part. In new production system, the
average prices will be calculated on the regional level. The union level average price will be the
weighted average of these averages. The same weights are used as in the CPI calculation.
14
CHAPTER 4
DISCUSSION
4.1
Consumer Price Index and Inflation
Table 4.1 presents the comparison of the CPI and inflation between 2006 current base
year and 2012 new base year. This table results show that the new 2012 base year is lower
than the current 2006 base year for computing CPI and inflation. The reason of the different
results appeared the higher gap CPI baskets between the current and new base year, changing
weights, adding new goods and service, and using arithmetic mean to geometric mean for
computing average price of CPI and inflation.
Table 4.1 Comparison of the CPI and Inflation between 2006 current base year and 2012
new base year
Particular
Base Year
2006 =100
2010-
2011-
2012-
2013-
2014-
2011
2012
2013
2014
2015
158.93
163.32
167.94
177.53
188.02
102.29
105.74
5.72
5.90
4.88
3.38
6.26
7.45
4.63
5.99
CPI
2012 =100
2006 =100
8.22
2.82
2.85
Annual rate of inflation
2012 =100
2006 =100
8.88
-1.09
4.72
Year on Year inflation
2012 =100
Source: Price Section, CSO
According to the geometric mean results, CPI was 102.29 and Inflation was 4.88 % for
2013-2014. In 2014-2015, CPI was 105.74 and Inflation was 3.38 %. The CPI of fiscal year of
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2014-2015 is higher than CPI fiscal year of 2013-2014. But, 2014-2015 fiscal year of inflation
lower than 2013-2014 of inflation. Because of the commodities’ price was not factual rising and
falling for 2013-2014 fiscal years. That’s why; the growth rate of CPI is very high.
Table 4.2 Comparison of monthly CPI &inflation between current base year and new base
year of 2014
CPI
Inflation
Month
2006 Base Year
2012 Base Year
2006 Base Year
2012 Base Year
JAN
179.24
106.63
4.90
4.58
FEB
179.42
106.76
6.03
5.71
MAR
180.04
107.06
6.26
6.30
APR
181.65
107.88
5.96
5.97
MAY
183.45
109.04
6.08
5.85
JUN
184.71
109.46
5.96
5.52
JUL
185.47
109.83
5.22
5.33
AUG
185.98
110.14
4.17
4.13
SEP
186.04
110.07
3.98
3.59
OCT
186.64
110.16
4.00
3.70
NOV
191.15
111.06
6.15
3.93
DEC
192.45
112.17
7.06
4.97
Source: Price Section, CSO
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Figure 4.1 Comparison of monthly CPI &inflation between current base year and new
base year of 2014
Comparison of monthly CPI &inflation between
2006 base year and 2012 base year of 2014
250
8
7
200
6
5
150
4
100
3
2
50
1
0
0
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
CPI 2006 Base Year
CPI 2012 Base Year
Inflation 2006 Base Year
Inflation 2012 Base Year
NOV
DEC
Source: Price Section, CSO
The comparison of monthly CPI & inflation between current base and new base for 2015
in Table 4.2 and Figure 4.1, that shows current 2006 base year is higher than new 2012 base
year of inflation with monthly. Because of a much of commodities were widely used in new CPI
which is reflected on current consumption pattern. Otherwise, 2012-based CPI basket has 274
items that of much more than 2006-based 158 items. That’s why, the CPI and Inflation of new
2012 base year is lower than that of current CPI and inflation.
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Table 4.3 Base Year Comparison within ASEAN Countries
Sr.
Country
Base Year
1
Singapore
2014
2
Thailand
2011
3
Myanmar
2006
4
Philippine
2006
5
Malaysia
2010
6
Cambodia
2010
7
Indonesia
2010
8
Laos
2010
9
Brunei
2010
10
Vietnam
2010
Source: ASEAN Statistical Year Book
Table (4.3) presents base year comparison within ASEAN countries for computing CPI.
The different base year of the ASEAN countries are using that Singapore (2014), Thailand
(2011), Malaysia, Cambodia, Indonesia, Laos, Brunei, and Laos (2010), and Philippine and
Myanmar (2006) for computing CPI. In the world, most of countries are trying to change
improving CPI with new base year for reflecting of the current situation of the households.
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CHAPTER 5
CONCLUSION AND RECOMMODITION
5.1
Conclusion
CSO has been undergoing to change the CPI, which is gauge in Myanmar, base year
from 2006 to 2012. It will help the available consumption patterns across nation-wide, and for
non-food subgroup titles, the weight was significantly increased up to 41.49 % compare with
that of 37.68% in 2006 base. CPI, which tracks inflation at the consumer level, has become the
key measure of inflation for Central Bank of Myanmar (CBM) to decide on monetary policy
action. United Nation (2009) reported that CPI is widely scope, which has used macroeconomic
indicator of inflation that has been targeting and monitoring to stable price, and as deflators in
the national accounts by governments and central banks. Price section has been doing exercise
of the new CPI pattern with IMF expert, who had come to CSO of Myanmar seven times.
According to experts, the revision of base year will have a marginal impact on the index. The
methodology of calculating inflation will also see a change from the present average method to
geometric mean, which will take care of a particular category driving the entire index, an
internationally accepted practice. The CPI basket includes items for which more than 75%
households have reported consumption.
In 2006-based CPI, the key problem of the index methodology is using unweighted
average of Township prices to calculate states/regions and union level indexes are incorrect.
The states/regions level indexes to be consistent with the Township indexes require weighting.
Although average prices at Township level acceptable, a focus on deriving comparable average
prices over time results in sub-optimal indexes. The current base year has too few varieties
priced (generally only one for each item) and too few outlets (usually only one in each
Township).
The new CPI measures more data. The current CPI 2006 base year listed one index for
each of the five pricing categories (food, fuel, clothing, housing, and miscellaneous). The new
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CPI, however, includes more data within each of the five categories. For example, the
“miscellaneous” category now includes subcategories of: education, medical care, recreation,
transportation, personal care, and household requisites. In addition, the new CPI provides an
index for each of the 15 Myanmar states/regions as well as a general “All Myanmar” index.
Therefore we hope the new CPI 2012-based would be much more reliable than the old one, and
this breakdown allows for greater precision and transparency in measuring price changes in the
Myanmar economy.
5.2
RECOMMENDATIONS
The government will be able to change reflecting CPI basket items, to use updating
HIES survey base year, and to follow the international standard of the CPI calculation to
improve economic statistics. The previous empirical evidence provided with this study not only
contributes to the literature to support the condition of the CPI in country, but also provides
information on policy makers in Myanmar upon which to analyse economic sector by
consumption pattern.
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REREFENCES
[1] Republicof India Ministry of Statistics and Programme Implementation (2015). “Base Year
Revision of Consumer Price Index (CPI).” Available from
www.govtempdiary.com/2015/01/base.../baseyearrevision22jan15
[2] United Nations. 2009. “Practical Guide to Producing Consumer Price Indices.” New York and
Geneva.
[3] Veronica, B., & Irene, T. 2010. “A Geometric Price Index for the Philippines: A Preliminary
Assessment.” BSP Working Paper Series 10(01).
21