eBusiness Weekly
Business Writer
The Consumer Price Index is calculated each month by ZimStat on a basket of 495 items which are then grouped into 83 classes, 41 groups and finally 12 major divisions.
Each group and division is weighted, that means ZimStat have a formula for assigning what fraction of total monthly spending the “average” consumer spends on each sort of item. For example, food is assumed to take up 30,34 percent of monthly spending while shoes take just 0,76 percent.
These sort of formulas are averages. Obviously in the month that someone buys a pair of shoes the percentage of that month’s spending going on shoes will be far higher than three quarters of a percent, but most people do not buy shoes every month, so the spending is averaged out. ZimStat also looks at an average consumer.
This year ZimStat has made two changes.
First it reset the index for each item to 100 in February, giving a new start. February was the month the RTGS dollar was officially delinked from the US dollar.
Secondly from March ZimStat started using a new basket.
In a statement the agency said: “With effect from March 2019 ZIMSTAT is publishing the new Consumer Price Index (CPI) with new weights and a classification. The use of a Classification of Individual Consumption by Purpose (COICOP) resulted in the creation of a new classification which resulted in coming up with 83 classes, 41 groups and 12 divisions. The number of items in the CPI basket is 495.
“The implementation of the COICOP classification is also part of the harmonisation project of Consumer Price Indices in different regions like the SADC region. All member states are supposed to adopt the new procedure to enable inter country comparisons of the CPI and the rate of inflation. The new weights are therefore applicable from February 2019 onwards.”
The data is collected in few days each month, generally around the middle of the month when ZimStat staff go out and collect the prices of the 495 items that are in the basket.
The month-on-month inflation rate is given by the percentage change in the index of the relevant month of the current year compared with the index of the previous month in the current year.
Reporting its findings ZimStat noted the month–on-month food and non-alcoholic beverages inflation rate stood at 19,90 percent in July 2019, shedding 35,17 percentage points on the June 2019 rate of 55,07 percent. The month-on-month non-food inflation rate stood at 21,72 percent, shedding 9,51 percentage points on the June 2019 rate of 31,23 percent.
The CPI for the month ending July 2019 stood at 208,92 compared to 172,61 in June 2019.
The mean month-on-month rate of inflation for the period January to July 2019 was 13,6 percent while the mean for the same period in 2018 was 0,2 percent. The annual average month-on-month inflation rate for 2018 was 3,1 percent.
