Quality adjustment Survey by purchase of products : The AFRISTAT experience in West and Central African countries _____________________________________ - PowerPoint PPT Presentation

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Meeting of Experts on Consumer Price Indices Geneva, 10-12 May 2010. Quality adjustment Survey by purchase of products : The AFRISTAT experience in West and Central African countries _____________________________________ Claude Tchamda, expert in price statistics, AFRISTAT

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Meeting of Experts on Consumer Price Indices

Geneva, 10-12 May 2010

Quality adjustment

Survey by purchase of products :

The AFRISTAT experience in West and Central African countries

_____________________________________

Claude Tchamda, expert in price statistics, AFRISTAT

E-mail : claude.tchamda@afristat.org


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Outline

  • Context

  • Structure of final consumption basket in West and Central African cities

  • Implementation of the method in AFRISTAT members countries

  • Some alternatives to the method

  • Difficulties and critics of the method

  • Perspectives, recommendations and conclusion


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Context (I)

  • Coexistence of conventional units of measuring (UoM) with traditional units such as pile, heap,pack, bundle, tin, box, cup, goblet etc. on markets.

  • Purchased quantities converted into conventional UoM vary from one transaction to another with the same traditional unit.


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Context (II)

  • Limited financial resources.

  • No or very few qualified human resources.

  • Harmonization of methodology among members countries.

  • A desire to minimize gap between the inflation rate and consumers perception.


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Structure of final consumption basket in West and African cities Central

The products of the consumption basket are classified into 4 groups:

1- The heterogeneous products: this group comprises mainly manufactured product and services (HE).

2- The homogeneous products sold in conventional UoM (O1).

3- The homogeneous products sold with non conventional units but more or less equivalent among outlets or sellers (O2).

4- The homogeneous products sold with non conventional units different from one outlet or seller to another (O3).


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Structure of final consumption basket in West and Central African cities: Bangui-Central African Republic


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Implementationof the method (I)

  • Survey by purchase of product is applied for the products O2 and O3.

  • Their weight varies from a minimum of 12% in Dakar to a maximum of 42% in Brazzaville.

  • The difference of variation of prices can originate in difference of methods from one period to another or from one country to another.


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Implementationof the method (III) (some examples from Yaoundé-Cameroon)


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Implementationof the method (IV)

  • Products O2:

  • a quantity of product is purchased and weighted once a month per seller or per outlet and the price is converted into a conventional UoM;

  • for the rest of the month, only prices are collected normally.

  • Products O3:

  • a quantity of the product is purchased for all sellers or outlets concerned and weighted,

  • the prices are converted into conventional UoM.


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Implementationof the method (VI)

The minimum number of observations is 30.

The balances used to weight products are electronic with a precision of 1g.

The computation of data is realized with a software (CHAPO) that integrates this method.

With time, some of these products are downgraded from O3 to O2 or from O2 to O1.


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Some alternatives to the method (I)

  • Collecting prices directly from sellers : It’s is likely to maintain prices artificially fixed.

  • Negotiating with sellers to weight the products without paying; can it last?

  • Choosing a sample of households and weight their products after purchases. Problem: coverage of all observations and sampling of households that reflects the reference population of the indices??


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Some alternatives to the method (II)

  • Survey of purchasers (CPI Manual, par. 6.96) ;

  • Survey of trends in wholesale prices (CPI Manual, par. 6.98) ;

    In the context of harmonization of practices and limited qualified human resources, these methods, are

  • either source of important biases comparing to consumer perception,

  • not easy to explain to users,

  • or difficult to implement and to harmonize.


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Difficulties and critics of the method (I)

Difficulties

  • Managing and identifying quality adjustment in some cases of suspected price variations.

  • Implementing a control system to make sure that the funds to purchase products are effectively used for this purpose.

  • Governance of the destination of products purchased.

  • Convincing financial partners because of suspicions concerning the cost and governance.


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Difficulties and critics of the method (II)

  • Critics

  • According to some colleagues, through this method, price statisticians buy information????

  • The method increases the costs of price collection ??? for the AFRISTAT members states, the cost of the implementation of the method varies from 400$ to 600$ and represents about 20% of monthly budget (equipments and managing fees excluded).


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Perspectives, recommendations and conclusion (I)

  • Perspectives

  • The cost of the method decreases progressively with the modernization or the standardization of the UoM in the economy.

  • There are possibilities to downgrading more O3 products to O2 and O2 to O1.


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Perspectives, recommendations and conclusion (II)

Recommendations

  • NSO can initiate or help government to standardize UoM for these types of products in their country

  • There is necessity for NSO to ameliorate the governance concerning the budget and the final use of products purchased

  • Organizing (OIT, FMI,UNECE or OAU) special training sessions on prices statistics for francophone developing countries in Africa.


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Perspectives, recommendations and conclusion (III)

Conclusion

  • Survey by purchase seems less difficult to implement and harmonize between countries;

  • It is likely to minimize the gap betweenthe inflation rate and the perception of consumers;

  • The method is easier to explain to common users of CPI.

  • The cost of the method diminishes with the modernization of the economy.


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Meeting of Experts on Consumer Price Indices

Geneva, 10-12 May 2010

The end

Tank you!

AFRISTAT

Economic and Statistical Observatory for Sub-Saharan Africa

Po B E 1600 Bamako-Mali

E-mail: afristat@afristat.org Web site www.afristat.org


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