F.P. Report
ISLAMABAD: The new inflation rebasing mechanism will be implemented from the beginning of upcoming fiscal year (2018-19), as it has already been finalized by the Pakistan Bureau of Statistics (PBS), which was also doing in-house parallel exercise of its execution.
However, the implementation of the rebasing mechanism, with base year 2015-16, still required formal approval from the Governing Council, a PBS official said.
So far, the base year 2007-08 was being utilized for evaluating the inflation, which had now gone obsolete due to arrival of many new products in the market that were utilized by the people, he added.
Under the new base, the weightage of several monitoring commodities had been reshuffled, including both urban and rural commodities, the official said.
“The current 2007-08 bases year is actually urban-biased, covering only urban commodities,” the official said, adding that in the new base, both urban and rural commodities had been given appropriate weightage to evaluate inflation.
“Currently, the PBS is monitoring 487 commodities collected from 76 urban markets in 40 cities across the country under the existing mechanism, however, as per the new method, it will monitor 356 urban and 244 rural items for evaluating the inflation.”
He viewed that the new base would strike a logical balance between the commodities used in urban areas and those in rural areas.
The PBS had to face questions raised by economists and researchers that the CPI had an urban bias. For removing this bias there would be now a rural CPI, an urban CPI and a total CPI.
“When 62 per cent of Pakistan’s population lives in rural areas, then the national CPI should not only track urban consumption patterns to calculate inflation but also include rural economy,” the official added.
He said the base was being formulated on the basis of survey and Industrial Census and Census of Manufacturing Industries (CMI). “All these activities culminate in rebasing,” he added. The CMI collected data from field and so far five meetings of the technical committee were held to formulate the data, the official said, adding that the new base would be operational from the next fiscal year (2018-19).
So far, the country, he said, was still using base of 2007-08 to evaluate inflation, which was scheduled to be changed in year 2015-16 and thereafter every ten years. However, the process of rebasing witnessed some delay, which the official attributed to the population census which had recently been concluded all across the county. “Due to census, the process of rebasing was delayed by one year,” he added.
He said the rebasing was scheduled to be completed in June 2017, however, due to population census exercise, the government had given one year grace period till June 2018 to complete the process.
