Minister of Economy, Labor and Welfare Jason Heyward gave an overview of the consumer price index [CPI]The methodology behind that calculation and the inflation rate of Bermuda in today’s parliamentary home [June 17]..
The Minister said: “This house recognizes recent media comments on inflation in other parts of the world and concerns about the accuracy of the statistics produced here in Bermuda. The Bermuda government recognizes the methodology and statistics bureau used. We firmly support the integrity of the data created.
BNV interview with Minister Jason Heyward yesterday
“Statistics Bureau [DOS] Use the United Nations Consumer Price Index Manual for methodological and computational guidance. The modified Laspe yres approach is used to measure the rate of change of a fixed price set over time.
“CPI calculations begin with the collection of over 3,100 price data from retailers and home service providers. Pricing varies in frequency and can be done monthly, quarterly, or annually. Once the prices of goods and services are collected, they are validated and cross-checked to verify the validity of the data used in the CPI calculation. The prices are compared to the price data for the previous month and the previous year. Monitor price fluctuations and maintain consistency.
“In 2013, the rent sector in Bermuda’s CPI basket accounted for the largest share or weight of household spending among the nine sectors of CPI. [26.7].. This sector tracks basket prices, land taxes, repair rates, material costs, and housing content insurance for residential and non-rental units subject to rent management.
“Currently, rents are stable. Weighting the rent sector, like other sectors such as food, which is rising monthly, has a stable impact on overall inflation.
“It is imperative to explain the differences in weighting between sectors in response to the ongoing dialogue comparing inflation in Bermuda with inflation in other countries. In addition, the factors that influence inflation movement vary from country to country. ..
“Historically, Bermuda has conducted HES approximately every 10 years. The last survey was conducted in 2013 and previously in 2004, 1993, 1982 and 1974. The data collection period ranged from 6 weeks to 4 months.
“DOS has been informed that international best practices have changed and household spending surveys need to be conducted every 5 years instead of 10 years.”
The full statement of the Minister is as follows:
Speaker,
It is my pleasure today to stand in front of this prestigious home to give an overview of the CPI. [CPI]The methodology behind that calculation, and general talk about Bermuda’s inflation rate.
Speaker,
The house recognizes recent media comments on inflation in other parts of the world and concerns about the accuracy of the statistics produced here in Bermuda. The Government of Bermuda firmly supports the methodology used and the integrity of the data produced by the Statistics Bureau.
Speaker,
Consumer price index [CPI] Is a statistical tool used to measure inflation and general price level changes in the consumption of goods and services by individual households. The index measures price fluctuations in a particular quality and quantity of goods or services. The combination of goods and services that make up the index is figuratively called a “shopping basket.”
Speaker,
When building a basket, thousands of selected goods and services are organized by product and service type, divided into subcomponents, and assigned to one of the following nine major spending groups or aggregate indexes: I did.
- 1. Food;
- 2. Rent;
- 3. Clothing and footwear;
- 4. Tobacco and liquor;
- 5. Fuel and power;
- 6. Household goods, services, consumables;
- 7. Transportation and vehicles;
- 8. Education, recreation entertainment and reading;
- 9. Health and personal care.
Speaker,
Department of Statistics [DOS] Use the United Nations Consumer Price Index Manual for methodological and computational guidance. The modified Laspe yres approach is used to measure the rate of change of a fixed price set over time.
The CPI calculation begins with the collection of over 3,100 price data from retailers and home service providers. Pricing varies in frequency and can be done monthly, quarterly, or annually. Once the prices of goods and services are collected, they are validated and cross-checked to verify the validity of the data used in the CPI calculation. Prices are compared to previous month and previous year price data to monitor price fluctuations and maintain consistency.
Speaker,
From the point of view of the quality of the items included, it is essential to maintain a “fixed” shopping cart. During the life of the CPI shopping cart, some goods and services in the basket will be discontinued and the qualitative composition of other goods and services will change. The need to replace the missing item is common to all CPIs, as the characteristics of some items evolve frequently and the production or sale of other items is so discontinued. This methodology explains this outbreak, and in Bermuda you exchange items in a merchandise basket. ..
Details of the department’s CPI methodological procedures are outlined in the publication “About the Consumer Price Index” available on the department’s portal page https://www.gov.bm/bermuda-business-statistics.
Speaker,
The current Bermuda CPI reference period is April 2015, which is a reference point for measuring price fluctuations in goods and services. Bermuda’s current product and service CPI basket is derived from the 2013 Household Expenditure Survey, which collects income and spending patterns and levels for all residents.
Speaker,
The survey has three main purposes.
- 1. First, collect household income to show the standard of living of the Bermuda population.
- 2. Next, update the consumer spending benchmark estimate for inclusion in the GDP calculation.When
- 3. Third, obtain current household spending data on goods and services to reflect the consumption habits of Bermuda residents for the purpose of reweighting the CPI.
Speaker,
HES provides detailed weekly spending data needed to assess household spending patterns. The CPI reweighting process checks for items in your shopping cart to include new items or remove items that are no longer important.
As reported by HES, the average weekly total household spending of major consumer groups reflects the weight or relative spending share of the nine sectors of the current CPI shopping cart.
Leasing sector weighting
Speaker,
In 2013, Bermuda’s CPI basket rent sector accounted for the largest share or weight of household spending among the nine sectors of the CPI. [26.7].. This sector tracks basket prices, land taxes, repair rates, material costs, and housing content insurance for residential and non-rental units subject to rent management.
Currently, rent is stable. Weighting in the rent sector, like other sectors such as food, which is rising monthly, has a stable impact on overall inflation.
Speaker,
Inflation will remain moderate if there is no significant movement in the sector with the highest weights. The sectors are weighted as follows:
Changes in CPI component weights
2013 2004 1993 component weight weight weight food 115 115 146 152 rent 267 325 276 Clothing and footwear twenty five 37 37 47 47 Tobacco and liquor 31 20 twenty one Fuel and electricity 39 39 30 33 33 Household goods, services, consumables 116 140 175 Transportation and vehicles 130 139 135 Education, recreation entertainment, reading 147 71 71 80 Health and personal care 130 92 81 All items 1000 1000 1000 Recent controversy
Speaker,
It is imperative to explain the differences in weighting between sectors in response to the ongoing dialogue comparing inflation in Bermuda with inflation in other countries. In addition, the factors that influence inflation movement vary from country to country.
Historically, Bermuda has conducted HES approximately every 10 years. The previous survey was conducted in 2013 and previously in 2004, 1993, 1982 and 1974. The data collection period ranged from 6 weeks to 4 months.
CARTAC Review
Speaker,
In response to a request from the Statistics Bureau [DOS]Caribbean Regional Technical Assistance Center in June 2022 [CARTAC] Conducted a technical assistance mission to improve the CPI, including the design and implementation of household surveys [HES] To estimate the weight of spending.
DOS advises that international best practices are changing and that household spending surveys should be conducted every 5 years instead of 10 years. In addition, CARTAC recommended that DOS conduct data collection for 12 months in order to better understand seasonal consumption habits.
New household spending survey
Speaker,
The ministry plans to begin collecting data on new household spending surveys within the next 12 months. However, the revised CPI “Shopping Cart” and spending weights will not be available until approximately two years after data collection is complete, and the base year will shift from 2015 to 2025.
From June 6th to 17th, 2022, the department participated in a remote technical assistance mission with CARTAC to obtain further advice on CPI and HES.
Speaker,
We thank Director Melinda Williams and her team of technicians for their efforts and dedication in these difficult times.
Thank you, Speaker.
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