No economy remains static, regardless of its performance or development trajectory. Products emerge and evolve, are withdrawn from circulation, or become redundant. New services replace older ones.
Technologies advance, and expenditure patterns change in response to new socioeconomic expectations and aspirations, and marketing and advertising initiatives. The proposed new basket for the consumer price index (CPI) is a response to these massive and ongoing changes.
Today Stats SA publishes data from its survey of the food and beverage sector, which has been published quarterly for the past year. Similar surveys on transport and accommodation have been introduced, or will be instituted, both because of the growing economic importance of the services sector in economic growth and as a way of better measuring developments in tourism-related industries.
These new surveys serve as good examples of the way statistical methodologies and instruments have to change to accommodate new dynamics in the objects of measurement.
Ten years ago, the impact of cellular communication, computer hardware and software, Web-based connectivity, lottery tickets, and DVD and CD players and discs would have been low priorities in monitoring the economy.
However, economies change and the methodological basis for measuring them must evolve.
Collection of information for the CPI, one of South Africa's most important economic indicators, is no more immune from this state of flux than any other statistical series. Changes in the way information for this indicator is collected have been introduced in the past year, with direct monitoring of prices on the shop floor increasingly replacing less reliable postal surveys.
As part of this ongoing review, Stats SA has been researching the construction of the basket of goods and services on which the majority of South African individuals and households typically spend their money, and for which prices are captured to calculate the CPI.
Yesterday we released a discussion document on the products and services that will comprise the CPI basket in the future. The economic changes that required the new surveys covering food and beverages, transport and accommodation are reflected in suggested revisions to the CPI basket. The new basket includes, for the first time, the price of transport by minibus taxi, while the restaurant and hotel, and accommodation services sectors will appear as separate categories for price collections.
Other products and services that will be included in the CPI for the first time include funeral costs, funeral insurance, internet service provider fees and laptops. DVD and CD players and discs replace VHS and audio tapes and players, and the lottery will be included in the basket once it is again operational.
Products and services have been identified for inclusion on the basis of total expenditure on an item and the number of households that buy the item.
The combination of these approaches allows for the exclusion of luxury items that may record high expenditure because they are expensive, but are only bought by a small minority of households.
For the first time, Stats SA has derived a basket of goods and services for each province. This was achieved by applying the selection criteria on a province-by-province basis, rather than for the country as a whole. This will make the CPI more responsive to the purchasing patterns of consumers in different provinces.
Revising the CPI basket has resulted in identification of 386 indicator products, excluding the health subbasket, which is still being finalised. Of these, 292 indicator products appear in all provinces. Stats SA expects to continue collecting a total of about 100 000 prices for separate products each month.
Changes in the structure of what is measured necessitate changes in the methodologies and statistical infrastructure that enable measurement. This is well demonstrated in the way the evolving economy compels Stats SA to revise its instruments of measurement on an ongoing basis, and improve the methodologies through which information collected is turned into statistical data.