Nepal Rastra Bank, the central bank, has started reviewing the Consumer Pricer Index (CPI) -- the main gauge of inflation -- as the pattern of spending on consumer goods has changed dramatically over the last one decade.
"We are reviewing the present basket of 301 goods and services that is an indicator of price hike," Trilochan Pangeni, executive director at the Research Department of Nepal Rastra Bank (NRB) said. The department is responsible for the collection and compilation of the CPI that is published every month.
"However, it will take a year to complete the review process and finalise the new basket," he said adding that since the CPI was formed the expenditure pattern of Nepali consumers had changed. The spending pattern changed drastically thanks to remittance sent by migrant workers.
Remittance has contributed to not only change in lifestyle but has also fuelled consumerism, said Pangeni. "The living standards of the rural populace has gone up and people there have also started spending on better education for their children. Nowadays, they send their children to boarding schools instead of government ones." A review is required for wider coverage, he added.
The consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households. It is an index determined by measuring the price of a standard group of goods meant to represent the typical market basket that includes 301 goods and services and applied to the typical urban consumer.
It is one of several price indices calculated by the central bank. The per cent change in the CPI is a measure of inflation. The CPI can be used to index -- adjust for the effects of inflation -- wages, salaries, pensions or regulated or contracted prices.
The price data are collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times. The weight data are estimates of the shares of the different types of expenditure as fractions of the total expenditure covered by the index. These weights are usually based upon expenditure data obtained for sampled periods from a sample of households.
The CPI is one of the most closely watched national economic statistics that is published every month by the Research Department of NRB, according to which the first six months' price hike stands at 14.4 per cent.