Sunday, August 8, 2010

Central bank's new inflation data might reflect real market price hike from next month

The central bank inflation data might reflect the real market price hike from next month as Nepal Rastra Bank (NRB) has 'almost-finalised' the revision of Consumer Pricer Index (CPI) -- the main gauge of inflation.
Due to change in the pattern of spending on consumer goods has changed dramatically over the last one decade, the CPI needed revision. "The NRB will bring in practice the revised CPI from next month," said a highly placed source at the central bank. "It has reviewed the present basket of 301 goods and services that is an indicator of price hike," it said adding that the basket -- of goods and services used to calculate the price hike -- failed to reflect the present market price hike..
"The number of goods and services in the basket has been increased but it will again be revised as the prices of all the commodities could not be available from all the market centres," acording to the source.
The 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 consumer. 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.
Currently, the prices are collected from 33 market centres across the country from hills, to plains and Valley. The number of market centres is not going to be increased.
The central bank publishes the inflation rate every month. The first eleven months' inflation rate stands at 9.7 per cent. But it doesnot reflect the current market price as the market price has continued to go up.
Since the current CPI was brought into practice, the spending pattern of Nepali consumers had changed drastically. CPI is one of the most closely watched national economic statistics that is published every month by the Research Department of central bank.

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