The Philippine Statistics Authority (PSA) said the base year for the consumer price index (CPI) will change to 2018 starting in January, to reflect changing Filipino household consumption patterns such as the shift to e-commerce.
National Statistician Claire Dennis S. Mapa said the PSA board approved the CPI rebasing to 2018 from 2012 at its Nov. 9 meeting.
“The rebasing of the CPI is done periodically by the PSA to ensure that the CPI market basket continues to capture goods and services commonly purchased by households over time; to update expenditure patterns of households; and to synchronize its base year with 2018 base year of the gross domestic product and other indices produced by PSA,” Mr. Mapa said in a Viber message.
This move is also in line with a board resolution that directs the synchronized rebasing of the price indices to base year 2006 and every six years moving forward, he added.
The change to 2018 as the new base year of the index will begin with the January inflation, which will be reported on Feb. 4.
Despite some recalibration, the food index will still have the largest weight for the rebased index, Mr. Mapa said.
The PSA has adjusted its information-gathering process in assessing prices during the pandemic. With restrictions in place, Mr. Mapa said they used alternative methods such as e-mails and phone surveys.
He added that the agency had factored in the rise of e-commerce and how it has affected people’s consumption.
“Because of the changing platform of business transactions and the existence of new technology, web scraping is explored as an alternative price collection method for the commodities in the market basket of the CPI for the National Capital Region,” Mr. Mapa said.
Bangko Sentral ng Pilipinas (BSP) Senior Assistant Governor Iluminada T. Sicat cited the PSA’s move to review the base year of the consumer basket.
“The items that are included in that year [2018] does not reflect yet the changes in the consumption pattern that happened during the pandemic,” she said.
“So we’re carefully looking at the different items that are providing movements in the inflation and we are carefully monitoring the increases or decreases in those items in the basket,” she added.
Security Bank Corp. Chief Economist Robert Dan J. Roces welcomed PSA’s move in light of changes in Filipinos’ consumption patterns.
“This makes it more able to capture recent consumer behavior, including the newer channels of consumption — such as e-commerce — that may be reflective of the latest causes of price changes,” he said in a Viber message.
Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said rebasing the price index could bode well for inflation numbers.
In 2018, inflation reached multi-year highs, peaking at 6.7% in September and October. This was mainly caused by elevated rice prices.
The BSP in the same year raised interest rates by 175 basis points to soothe inflation.
“Rebasing CPI to 2018 will likely improve the 2021 optics since the share of transport, petroleum products and rice will likely be given more weight than meat,” he said.
“If a smaller weight is given to meat products, which has been the main contributor to 2021 headline inflation, the optics will likely improve. It will not, however, erase the fact that real policy rates have been kept negative for the longest recorded period in our economic history,” he added.
Headline inflation this year has exceeded the 2-4% BSP target every month except July. This was mainly driven by low pork supply amid the African Swine Fever outbreak and soaring global oil prices.
In October, inflation eased to 4.6% from 4.8% in September, bringing the year-to-date average to 4.5%.
The central bank expects inflation at 4.3% this year, with the November rate falling within target.
The BSP has vowed that it will focus on keeping its support for economic recovery, saying it expects inflation to settle back to its target in the next two years.
The Monetary Board earlier this month kept interest rates steady and will review its policy in its last meeting this year on Dec. 16.
Source: Businessworld