Malawi consumer price index (CPI) basket is set for revision following the results of the fourth Integrated Household Survey (IHS), the National Statistics Office (NSO) has said.
Speaking on the sidelines of a stakeholder conference on the Extended Credit Facility (ECF) in Lilongwe on Monday, NSO commissioner for statistics Mercy Kanyuka said inflation rate will from January next year be computed using the revised basket.
“NSO has just finalised the field work of the one-year IHS and it is the one that gives the basis for revising the weights for CPI and the same basket is used for the inflation rate.
“Since May, we have been analysing the data and coming up with consumer aggregates and will be working closely with the IMF [International Monetary Fund] to come up with a revised basket,” she said.
The office used the 2010 IHS to come up with a basket of commodities to be included in the current basket. However, the weights were debased in 2012 and a quick survey was carried out for this purpose.
Commenting on the same, president of the Economics Association of Malawi (Ecama) Henry Kachaje said during the meeting that it is a good development that the basket will be revised which gives proper policy direction in terms of what government should focus on to contain inflation.
Catholic University head of economics department Gilbert Kachamba said the revision of the consumer basket will be timely now that a lot of Malawians are consuming more services than it was the case before.
“As the income levels are increasing, the consumption of services like education, health and recreation is also getting higher,” he said.
CPI is the most well-known indicator of inflation. It is the barometer of the performance of the economy and a key indicator in evaluating the results of the monetary and fiscal policy in a country.
The CPI is also used as a deflator in national account estimates for converting values at current prices to values at constant prices.
There are 12 groups in the CPI and each group has many commodities whose prices are collected every month.
Malawi also computes the producer price index which measures the average change over time in the selling prices received by domestic producers for their output n