SPC-ABS workshop on updating the weight reference period of the Consumer Price Index

Between 29 May and 1 June 2017, statisticians from Pacific Island countries and territories came together in Noumea, New Caledonia for a workshop on updating the weight reference period of the consumer price index (CPI). The workshop was organised by the Pacific Community (SPC) and the Australian Bureau of Statistics (ABS), and aimed at training price index compilers on the use of data from expenditure surveys and other sources to rebase their CPI.

The Consumer Price Index is among the most important statistics compiled by national statistical institutes. Together with economic growth, it is the most widely used statistic for monitoring economic development and for developing economic policy. It is an essential tool to evaluate the evolution of the purchasing power of personal income, and is often used for indexation purposes for various social benefits.

For the calculation of inflation, the price changes of specific items are given weights, which correspond to the relative importance of each item in total consumer spending at a specific period in time. In reality, however, as incomes change and new products and services enter the market, consumers change their consumption patterns. Because of this, in order to ensure that the CPI remains representative of what consumers actually purchase, it is important that the basket of goods and services, as well as their weights, are periodically updated. The workshop aimed at training statisticians in the use of internationally recommended methods and techniques for implementing a CPI rebase, and to provide them with practical examples of how to apply them in practice. The workshop’s aim was in line with the goals specified in the Ten Year Pacific Statistics Strategy, and sought to further harmonise the definitions, methods and classifications used in the Pacific region. It built on important work done in this area, such as the adoption and implementation of the Pacific Classification of Individual Consumption by Purpose (COICOP) classification. Adoption of recommended methods by statisticians will lead to improvement in the reliability and comparability of consumer price indices in the Pacific region.