The country’s revamped statistical agency, Statistics Botswana (SB) has announced plans to update its current measure of consumer prices increase in order to factor in changes in priorities and provide a more accurate view of the general economy.
As a result, a total of 49 areas will now be covered in the CPI prices collection compared to 46 in the previous CPI. The agency has also decided to remove some items such as Video Cassettes Recorder (VCR), Blank Video Cassette and Rental of DVD which are no longer consumable in the local market.
Acting Manager ÔÇô National Accounts and Prices, Phaladi Labobedi said Wednesday that the Consumer Price Index (CPI) rebase to September follows the reweighting of the basket using the 2009/10 Botswana Core Welfare Indicators Survey results. The last rebasing of the CPI was done in 1996 and 2006 respectively.
“There is need to understand that weights of the CPI represent the proportions of consumption expenditure by households in a specific period. Each indicator product/item in the CPI has weight attached to it which reflects its relative importance in the overall index. The impact that a price change for a good or service has on the overall index is therefore determined by the weight attached to it,” explained Labobedi.
The domestic CPI weights for the base period of September 2016 will be derived from the 2009/10 Botswana Core Welfare Indicators Survey results, with expectation that the agency will be updating the CPI weights within every five years from the year 2019.
Deputy Statistician General, Dabilani Buthali said Wednesday that international best practice dictate that the CPI ought to be rebased every five years to keep it abreast with changing household consumption patterns over time.
“I believe this rebasing of the CPI, late as it might be, is a welcome development to stakeholders who had often expressed concern on the delay to rebase this important index,” Buthali said.
The rebasing of the CPI comes at a time when economic experts have pointed out that the rising level of unemployment in the country could be one of the contributors to the low inflation recorded by the domestic economy over the past several months.
On the other some experts note that lack of up to date unemployment figures preclude the assessment of whether the low inflation is directly linked to the high unemployment in the domestic labour market.