UST

What is the Consumer Price Index (CPI)? the average change over time in the prices of: consumer items. goods services that people buy for day – to – day living. It combines economic theory with sampling and other statistical techniques and uses data collected monthly to produce a timely measure of average price change.

Cont. CPI provides an estimate of the price change between any two periods. The CPI follows the prices of a sample of items in 12 main categories of consumer spending—such as food, clothing, shelter, and medical service.

Why is the C P I Important? economic indicator- measure of inflation, effectiveness of economic policy adjusting income payments wage increases. deflator of other economic series price changes inflation-free versions

CPI calculation ItemsWeightBasecurrentCPI Dura Dura Fetarita Yellow maize (Dura Shami) Millet (Dukhn) wheat local barley Imported barley Egyptian rice ( Imported ) ∑ PnQo ∑PoQo Example X100

Inflation rates MonthCPI 2008CPI 2009Inflation January February March April May June July August September October November December

Why Update the C P I? Updating the CPI basket items, and their weights; represents the current consumption patterns made by Sudanese households. The item’s weight is the share of total household expenditure on the item to total households’ expenditure on all items.

Cont. Used as deflator for GDP in Services Sectors for example : Education, Health …ect. change the base year according to the GDP year using the formula : GDP Current year Changed CPI

CPI basket The last update of the Sudanese CPI basket items was in 2007 based on the HBS that conducted in The previous basket of the CPI was based on 1978.

Weights reflects contribution to total expenditures of households. determines the impact that its price change will have on the overall index.

CPI Calculation Laspeyres formula is used for the calculation. CPI basket consists of 663 items and the consumer basket consists of 944 items. cut of temporarily missing and seasonal items are treated by distributing their weights at the other items in the same expenditure group. Prices for fruits, vegetables, fresh meat, and fish food are collected on a weekly basis.other items are collected once a month. The base year is 2007 for all the 15 northern states. CPI is compiled for each state and for Sudan at the levels: state/ urban, state/ rural, and state.

CPI S TRUCTURE Step1: Data/ Prices entry process - geographic areas and geographic weights. ∑ PnQo ∑PoQo *100

Cont. Step2: Calculation of relative prices and new weights, by dividing the current price by base year price. In addition, the new weight is calculated by multiplying the relative price by the base year weight. Step3: To compute the minor group level, new weights for sub-minor groups within the minor group are aggregated and divided by the base year weights. The same procedures are done to calculate the Index at the major group level and finally for the general Index.

CLASSIFICATION SYSTEM 12 Divisions47 Groups117 Classes12 Divisions41 Groups12 Classes COICOP Sudan

Used as deflator for GDP in Services Sectors for example : Education, Health …ect. change the base year according to the GDP year using the formula : GDP Current year Changed CPI X 100

COICOP Code - Expenditure group Consumption Group Sudan/ Urb Sudan/ Rur Sudan Total Food and non-alcoholic beverages Food Bread and cereals (ND) Meat (ND) Fish and seafood (ND) Milk, cheese and eggs (ND) Oils and fats (ND) Fruit (ND) Vegetables (ND) Sugar, jam, honey, chocolate and confectionery (ND) Food products n.e.c. (ND) Non-alcoholic beverages Mineral waters, soft drinks, fruit and vegetable juices (ND)

CPI weights for the main groups and minor groups for food Consumption Group Sudan/ Urb Sudan/ Rur Sudan 03 - Clothing and footwear Housing, water, electricity, gas and other fuels Furnishings, household equipment and routine household maintenance Health Transport Communication Recreation and culture Education Miscellaneous goods and services

CPI weights for the main groups Khartoum old Weight CodeDescription M Weight 10000Total Food,Drink & Tobacco Total Clothing,Shoes Total Rent And Fuels Total Household Opern Total Health Care Total Transport,Etc Total Entertainment Total Education Total Miscellaneous Total Weight

Consumer Price Indices

Monthly Inflation Rates for Northern States