ECC decides to revise CPI, WPI base year to 2007-08: FBS unable to release CPI data

The Economic Co-ordination Committee (ECC) of the Cabinet has decided, in principle, to revise the base year of Consumer Price Index (CPI) and Wholesale Price Index (WPI) from 2000-01 to 2007-08, and "change of the base year of Quantum Index of Large Scale Manufacturing Industries (QIM) from 1999-2000 to 2005-2006.
However, the ECC has put the Statistics Division in a very awkward position by saying that implementation on the plan would commence after the academia and members of the ECC are satisfied. The Federal Bureau of Statistics has not been able to release CPI data because of this embarrassment.
A workshop will be arranged by the Deputy Chairman of Planning Commission to further discuss the plan, which will be attended by ECC members . According to Statistics Division, from July 2011, the indices prepared on the previous base years have been discontinued and the indices prepared on the new base years have been adopted.
According to official documents, the ECC was informed that base year for the CPI, WPI and Sensitive Price Indicator (SPI) is changed from time to time. Current base year is 2000-01. In order to change the base year, on the directions of the then Prime Minister, a technical committee, headed by Vice Chancellor of Pakistan Institute of Development Economics (PIDE) was notified in 2006. The Committee has now submitted its report for the ""9th base change" of CPI, WPI and SPI indicators, 2007-08.
CPI: It was informed that the CPI measured average change in the consumer prices of a basket of 374 items, normally 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 ECC was briefed that a family budget survey, conducted by the Federal Bureau of Statistics (FBS) in 2007-08 to identify a revised list of goods and compute their weights, covered 54,309 households in 65 cities. Based on the results of the survey, a revised list of 487 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 computation of weights is the aggregate of all five income groups, which is in line with the previous practice as well as regional system. The major change in new series with base year 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, the number of groups and grouping of the items would be different from the previous base year 2000-01. Besides, geographical coverage of the 2000-01 CPI was 35 cities, which has been increased to 40 cities in the new CPI. The selection of cities has been made on the basis of giving proper representation to large cities (population of 500,000 and above), medium cities (population 100,000-500,000), medium-small cities (population 50,000 to 100,000) and small cities (population below 50,000). In the new series, with base 2007-08, the income groups have been divided into five different income quintiles. Besides, in the new series, with base 2007-08, the rent component would be based on the actual rent survey.
WPI: The ECC was informed that WPI measured the wholesale price level of a basket consisting of 425 items sold at primary level in the selected markets of 18 cities. The weights of these items were derived from the aggregate value of marketable surplus of the items covered in WPI. It was also intimated that for the new series with 2007-08 as base year, a set of 463 items has been selected in the light of production and sale of commodities in the wholesale markets, while the number of markets/cities would be increased to 21 markets/cities, besides collecting secondary data from manufacturers, importers and distributors. Weights have been developed on aggregate value of marketing surplus of each item. The ECC was further informed that 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". Due to this, the composition of commodity groups has changed from the previous base 2000-01.
QIM: The ECC was further apprised that, besides CPI and WPI, base year for the Quantum Index of Large Scale Manufacturing Industries (QIM), which measured the changes in production over time on monthly as well as cumulative basis, was also proposed to be changed. The weights presently used for the QIM were derived from the Census of Manufacturing Industries (CMI) 2000-2001. Total 100 items with cumulative weight of 75.08 percent are being used for computation of QIM. The production data for QIM was collected from the Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production (MOIP) and Provincial Bureaus of Statistics (BOS). The base of three items was last time changed in 1999-2000. In order to change these bases a technical committee was constituted for the change of base year 1999-2000 to 2905-06 and approval of weights developed on the basis of CMI 2005-06. The re-based QIM has been computed with 112 items having total weight of 70.332 percent. It is to be noted that cotton ginning has been excluded from the new base as per UN International Standard Industrial Classification (ISIC) Rev. 3.1
During the ensuing discussion, it was apprehended that the critics were likely to take advantage of the proposed change of base years and would term it as Government's effort to show better performance. It was explained that change of base year was a regular exercise and the proposed change would be the ninth (9th ) change of base year since independence. It was changed in 1948, for the first time, while it was last changed in 2000. It was suggested that re-basing should be done after every five years, instead of existing ten years. It was also observed that there was a need for back-costing and consultation with the academia for further deliberation or the proposed changes.