COMPILING CONSUMER PRICE INDEX IN VANUATU

Prices of a wide range of goods and services are collected regularly by the Vanuatu Statistics Office for the purpose of CPI.  The CPI is used, among other things, to measure inflation. The Vanuatu CPI was re-based in 2000 to reflect the expenditure patterns of households from the 1998 Household Income and Expenditure Survey, import data and sales. Vanuatu relies heavily on imported goods for consumption, and imported goods make up approximately 70% of the basket of goods in the CPI. The CPI covers the two urban centres of Vanuatu-Port Vila and Luganville.

Brief description of the CPI

Price collection

CPI weights

CPI calculation

• Brief description of the CPI

The Consumer Price Index (CPI) measures average changes in the price of a basket of goods and services which account for a high proportion of expenditure by the CPI population group - households living in Port Vila and Luganville. This basket covers a wide range of goods and services grouped into seven major CPI expenditure groups:

• Food consumption
• Drinks and Tobacco
• Clothing etc
• Housing and Utilities
• Household Supplies
• Transport and Communication
• Recreation, Education and Health

Indexes for the two urban centres measure price movements over time in each city individually, but do not measure differences in retail price levels between them.

• Price collection

  The timing and frequency of price collection differs by item in order to obtain reliable price measures. For example, the prices for fruits and vegetables and bread are volatile therefore frequent price observations for these is required to obtain average prices for the quarter. For most items, price volatility is not a problem and prices are collected during the middle month of each quarter.

• CPI weights

There are 53 expenditure classes and each expenditure class has its own weight, or a measure of relative importance. In calculating the index, price changes for the various expenditure classes are combined using these weights.

Changes in the weighting pattern have been made at approximately 10 years intervals to take into account of changes in household spending patterns. The new weights current used by the series are derived using the 1998 HIES and Imports data combined.

• Calculation of CPI

Movements in indexes from one period to another can be expressed either as a change in index points or as percentage changes. The following example shows the method of calculating changes in index points and percentage change between any two periods.

All  Groups CPI: Weighted average of Port Vila and Luganville

Calculation	Index
September Qtr 2000	103.1
June Qtr 2000	101.0
Change in index points	2.10
Percentage change

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