The Economics and Statistics Office will use a new basket of goods and services when it conducts its Consumer Price Index survey in June.
Speaking at the Chamber of Commerce Luncheon Wednesday, Financial Secretary Kenneth Jefferson said the current CPI basket of goods was outdated.
‘The current basket has been in use since 1994 and is based on the 1991 Household Income and Expenditure Survey,’ he said.
The ESO used the Household Budget Survey conducted in the first half of 2007 as part of the National Assessment of Living Conditions study as a basis for revising the basket of goods. The data from that survey was processed, coded and categorised using United Nations Classification of Individual Consumption According to Purpose, Mr. Jefferson said.
‘Following this UN classification system, there will be 12 major categories in the new CPI basket as against eight major categories in the current basket.’
Housing costs will receive the highest weight at 391 per thousand.
‘This means that for every CI$1,000 of expenses, an average household in Cayman spends $391of that for housing, including utilities,’ Mr. Jefferson said.
Other weightings per thousand in the new CPI basket are: 137.9 for miscellaneous goods and services; 88 for transport; 76.5 for food; 61.6 for communication; 57.2 for household equipment and maintenance; 48.1 for recreation and culture; 42.9 for restaurants and hotels; 35.6 for clothing; 28.5 for education; 25.6 for medical and health; and 7.1 for alcohol and tobacco.
The new CPI basket of goods includes several products and services that are not included in the existing basket. In the communication category, for instance, cellular phone calls and internet connection services are included in the new basket. In recreation and culture, computers, software, video and audio gadgets are included.
‘The work of the ESO is not over yet in this area,’ Mr. Jefferson said. ‘A survey of specific varieties of goods and services that can best represent the 12 categories in the new basket is being finalised this month.’
Mr. Jefferson said the project of developing a new CPI basket of goods was completed earlier than initially targeted and ESO had submitted a preliminary report to Cabinet in February 2008.
‘The ESO is expected to submit a final report on the new CPI basket and the first CPI survey using this basket in June 2008.’
Mr. Jefferson said the CPI was a very practical statistic that was widely used by the business sector for reviewing contracts, rents, fees and salaries.
‘This is by far the most widely-used statistic by the business sector,’ he said. ‘Updating the CPI basket was therefore considered an urgent task for the ESO.’
The CPI report in June will also include statistics such as average spending of households and persons and the total estimated spending for specific items in the basket of goods, Mr. Jefferson said, adding that the report would be made available to all businesses in the Cayman Islands.