# _Deflators_

Spatial price indices were calculated using a common food basket and spatial prices to make consumption comparable across regions. The Laspeyres index is chosen as a deflator due to its moderate data requirements. The deflator is calculated by analytical strata areas based on the price data collected in wave 2 of the SHFS. The Laspeyres index (Table 3) reflects the item‐weighted relative price differences across products. Item weights are estimated as household‐weighted average consumption share across all households before imputation. Based on the democratic approach, consumption shares are calculated at the household level. Core items use total household core consumption as reference while items from optional modules use the total assigned optional module household consumption as reference. The shares are aggregated at the national level (using household weights) and then calibrated by average consumption per module to arrive at item‐weights summing to 1. The item‐weights are applied to the relative differences of median item prices for each analytical stratum. Missing prices are replaced by the item‐specific median over all households.

**Table 3: Spatial Laspeyres index**

|**Analytical strata**|**Foo deflator**|
|---|---|
|IDPs|0.856|
|Nomads|1.030|
|Banadir (Urban)|0.910|
|Nugaal (Urban)|1.058|
|Bari and Mudug (Urban)|0.976|
|Woqooyi Galbeed (Urban)|1.181|
|Awdal, Sanaag, Sool and Togdheer (Urban)|1.181|
|Hiraan, Middle Shabelle and Galgaduud (Urban)|1.119|
|Gedo, Lower and Middle Juba (Urban)|0.960|
|Bay, Bakool and Lower Shabelle (Urban)|0.931|
|Bari, Mudug and Nugaal (Rural)|0.960|
|Awdal, Togdheer and Woqooyi (Rural)|0.887|
|Hiraan, Middle Shabelle and Galgaduud (Rural)|0.925|
|Bay,Bakool and Lower Shabelle(Rural)|0.945|

Source: Authors' calculations.

To obtain the US$1.90 PPP (2011) poverty line and correct for price differences over time, a price index was created –in the absence of a national CPI– using consumption shares from the survey and prices collected by the Market Price Survey (MPS) and by the Food Security and Nutrition Analysis Unit, Somalia (FSNAU).<sup>15</sup> Inflation between 2011 and December 2017 was obtained from the growth in the price index, which was estimated in two steps. First, the price index was calculated from 2011 to February 2016 using data from Wave 1 of the SHFS and prices from FSNAU, and then from February 2016 to December 2017 with data from Wave 2 of the SHFS and prices from the MPS.<sup>16</sup> In the first step, consumption shares of 109 food and 68 nonfood items were aggregated according to their Classification of Individual Consumption by Purpose (COICOP) code, and then combined with monthly prices from FSNAU for 51 products. As a result, 32 matched COICOP codes were used to calculate

> 15 FSNAU collects monthly prices of commodities in 50 markets across all regions. The MPS collects weekly prices of a broad range of products and services as well as exchange rates from 14 key markets across all Somali regions. 16 The products and services in the MPS are a close match with the food and nonfood items that form part of the consumption module of the Somali High Frequency household survey component. The price survey is implemented using a stringent set of quality standards.

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