Statistics South Africa announces important changes to the producer price and consumer price indices.

 A news item published earlier this year on masterbuilders.co.za dealt with information about the Consumer Price Index weights.

StatsSA, recently, announced major changes aimed at ensuring more accurate inputs in the calculation of the official Producer and Consumer Price Indices. In respect of the Production Price Index (PPI), it would do away with the `all goods` PPI and break it down into five industry indices---agriculture, mining, electricity, intermediate manufactured goods and final manufactured goods. It would also update the PPI weight basket annually with effect from 2014. The next adjustment to the PPI weight basket is due in 2013.

Mr Joe de Beer, Deputy Director General of Economic Statistics of Stats SA, said that the price index for final manufactured goods will be the best indicator of price fluctuations of the various production phases and that the proposed changes to the data is in line with international practice.

StatsSA also announced that new Consumer Price Index (CPI), would be introduced in January 2013, based on the 2010/11 Income and Expenditure Survey of 34 000 South African households. Thereafter, StatsSA`s Living Conditions Survey (LCS) will be used to up-date CPI weights every three years, commencing 2016. The current CPI weights were introduced in January 2009 and were based on data collected during the 2005/06 LCS household survey.

Using the Living Conditions Survey data would allow StatsSA to pick up changes in consumer behaviour sooner and bring it into to CPI basket to make the CPI  weighting `more relevant and responsive to changes in the economy`. Ulrich Joubert, economist at Kruger International, said: "This is something that happens world-wide and will not change the 3% -6% inflation target. The inflation rate is used for adjustments to rental agreements, wages and other contracts. Regular adjustment merely improves the system, and provides a more realistic picture of consumer spending patterns".

Those who believe the official CPI fail to reflect their circumstances may now put their assumption to the test. To allow people an opportunity to calculate their personal inflation rates, Stats SA placed a personal inflation calculator on its website last week. Visitors to the site, www.statssa.gov.za can now call up a form and fill in their estimates of their expenditure on different items. The site will then compute the weightings based on the information provided and apply the relevant inflation rates to produce a personal outcome, which may then compared with the 5.7% official inflation rate recorded in September 2011.

Pieter Rautenbach