Sabrina N. Gordon, Business Reporter

Hughes

The Statistical Institute of Jamaica (Statin) has revised the inflation numbers year to date, which shows calendar inflation running at 7.1 per cent to the end of August, compared to 5.6 per cent in the 2006 period.

August inflation was 0.9 per cent.

The numbers are showing higher out-turns based on a revision of the commodities basket on which price movements are calculated.

For example, the inflation rate for the calendar year to June has been revised upwards to 5.1 per cent, or near double the rate previously recorded.

The old All Jamaica index had showed 2.9 percentage movement in price under the old Consumer Price Index series.

For calendar year 2006 the revised series reflected an inflation rate of 5.6 per cent compared to 5.8 per cent in the old series.

For the fiscal year 2006/07 - April to March - the inflation outturn has been amended to 8.0 per cent, compared to 6.6 per cent.

Statin last week launched its upgraded basket of 482 commodity items.

"The updated basket is much more reflective of current reality than the previous and represents a huge change in the economy," said Dr. Wesley Hughes, director general at the Planning Institute of Jamaica.

The revision of the inflation basket was done collaboratively with the PIOJ, Bank of Jamaica and Statin.

The previous calculations were done on 288 items.

Although the old and new series are not strictly comparable based on the weights attached and increased number of items in the basket, Statin attributed the difference in the level of increases to changes in the relative importance or weights of the commodities in the basket of the consumer goods and services.

Under the new Classification of Individual Consumption According to Purpose (COICOP), there are 12 divisions whose weightings previously captured in the 1984 Household Expenditure Survey (HES) that have been amended: food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; furnishing, household equipment and routine household maintenance; recreation and culture; as well as restaurants and hotels.

Notably, the category of food and non-alcoholic beverages moved from 45.9 per cent to 37.4 per cent. This was seen as a move in the right direction in line with the country's goal of achieving developed nation status by year 2030.

"The HES indicates an evolving of the economy whereby the level of expenditure on food share has declined as representing a growth /development in the economy moving into the direction that it should," said Hughes, Jamaica's chief economist and planner.

Food spending

"As income levels increase the level of expenditure on food decreases and people spend more on other things in line with a developed nation."

The price changes under the revised series also reflected higher movement at the regional level, with inflation for the Greater Kingston Metropolitan Area (GKMA) at the end of June being 8.0 per cent for the new series, compared to 3.2 per cent under the old series.

While the GKMA index for the fiscal year 2006/07 also showed an increase moving from 5.5 per cent in the old series to 7.7 per cent in the revised series, the fiscal year to date rate of inflation remained the same at 2.5 per cent.

For the calendar year 2006, GMKA also recorded 5.4 per cent inflation in the revised series compared to 5.6 per cent for the old.

For the fiscal year to date June, a 2.6 per cent movement was recorded, while the old series was 1.2 per cent.

The revision of the commodities basket was done on the basis of changes in the consumer expenditure pattern.

"The new basket was constructed to reflect the current level of consumption patterns," said Monica Bartley, director of administrative statistics.

In fact, the new basket is designed to be robust: Statin will add products that enter the market and flush out items that are pulled from circulation.

"The new methodology in the computation of the CPI will allow monthly changes, which will allow for changes in individual items as new commodities comes on the market and others becomes obsolete," said Bartley.

She said that Statin is also exploring the possibility of updating the basket on a yearly basis.

The CPI will now be published in a new bulletin that will include the all items index for the three regions of GKMA, Other Urban Centres and Rural Towns, as well as the All Jamaica series by divisions, groups and classes.

Other inflation revisions

1. The increase in the index for other urban centres was 5.1 per cent under the new series, compared to 5.1 per cent for the old.

For fiscal 2006/07 prices were 9.4 per cent, more than a point above the 8.1 per cent recorded in the old series.

For the calendar year 2006, inflation of 7.0 per cent in the consumer price index remained the same for both the old and new series.

The fiscal year to date prices showed an increase of 2.2 per cent in the revised series while in the old the increase was 1.6 per cent.

2. Rural areas all division index recorded upward price movements of 5.2 per cent both for the revised and old series for the calendar year 2006.

The calendar year to date price movement was 4.7 per cent for the revised series compared to 2.3 per cent in the old series.

Fiscal year 2006/07 inflation was 8.0 per cent against a 7.2 per cent in the old series.

sabrina.gordon@gleanerjm.com