Kenya’s statistical body has rebased Consumer Price Index, Producer Price Index (PPI) and four Quarterly Labour Reports as part of the continuous effort to improve the quality of data.
The Kenya National Bureau of Statistics (KNBS) said this will also include the measurement of inflation, upon which policy makers base their decisions.
The CPI will have a new basket of 330 items, compared to the previous basket of 234 items.
Obsolete items in the old basket have been dropped, while new and more relevant items have been included.
Currently, CPI contains the basket of goods and services is classified into 12 groups: food and non-alcoholic beverages; alcoholic beverages, tobacco and narcotics; clothing and footwear; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; health; transport; communication; recreation and culture; education; restaurants and hotels; miscellaneous goods and services.
The weights in the rebased CPI have also been updated and the Expenditure Groups have been recalculated, based on the 2015/16 Kenya Integrated Household Budget Survey.
Uses of the CPI In Kenya
i). As the main estimator of the rate of inflation – The percentage change of the CPI over a one-year period is what is usually referred to as the rate of inflation.
ii). As a macroeconomic indicator – The CPI is used for general economic/social analysis and policy formulation particularly since it conveys important information about indirect tax revenue.
iii). As a tool in wage negotiation and indexation – CPI is used to adjust taxes and to determine, among other things, wage levels in the event of trade disputes, social security benefits, public service remuneration and pensions.
iv). As a deflator of expenditure – The prevailing CPI can be used to establish the real/constant value by deflating nominal values of goods and services.
The review of the PPI was to reflect changed production patterns and a new industrial structure.
“The Quarterly Labour Force Survey will more accurately measure key labour statistics, including labour force participation, employment and labour utilisation,” said the Central Bank of Kenya.
These revisions have been guided by internationally accepted best practices as well as the Common Market for East and Southern Africa (COMESA) and the East African community Harmonized Consumer Price Index regulations.