ISLAMABAD (APP) – The new inflation rebasing mechanism is likely to be be implemented when the new governemnt comes into power after the 2018 general elections schedueld on July 25.
The rebasing was scheduled to be completed in June 2017, however, due to population census exercise, the government had given one year grace period till June 2018 to complete the process official sources told APP.
The Pakistan Bureau of Statistics (PBS) was hopeful to implement the new price mechanism from the beginning of the current fiscal year (i.e. from July), however the Governing Council is yet to approve the summary to make it effective, sources said.
“We have already finalized rebasing mechanism and are doing in-house parallel exercise for its execution, hower its implementation with base year 2015-16, still requires formal approval from the Governing Council,” they said adding that the exercise was witnessing delays due to focus on census and compilation of its results.
They were of the view that PBS was very much initerested to implement it as soon as possible to reduce its burden, as currently it had to collect data under both previous as well new mechanisms.
An official in the bureau said that the new mechanism is more likely to be implemented once the new government come into power after general elections.
So far, the base year 2007-08 was being utilized for evaluating the inflation, which had now gone obsolete due to arrival of many new products in the market that were utilized by the people, he added.
Under the new base, the weightage of several monitoring commodities had been reshuffled, including both urban and rural commodities, the official said.
“The current 2007-08 bases year is actually urban-biased, covering only urban commodities,” the official said, adding that in the new base, both urban and rural commodities had been given appropriate weightage to evaluate inflation.
“Currently, the PBS is monitoring 487 commodities collected from 76 urban markets in 40 cities across the country under the existing mechanism, however, as per the new method, it will monitor 356 urban and 244 rural items for evaluating the inflation.”
He viewed that the new base would strike a logical balance between the commodities used in urban areas and those in rural areas.
The PBS had to face questions raised by economists and researchers that the CPI had an urban bias. For removing this bias there would be now a rural CPI, an urban CPI and a total CPI.
“When 62 per cent of Pakistan’s population lives in rural areas, then the national CPI should not only track urban consumption patterns to calculate inflation but also include rural economy,” the official added.
He said the base was being formulated on the basis of survey and Industrial Census and Census of Manufacturing Industries (CMI). “All these activities culminate in rebasing,” he added.
So far, the country, he said, was still using base of 2007-08 to evaluate inflation, which was scheduled to be changed in year 2015-16 and thereafter every ten years.
However, the process of rebasing witnessed some delay, which the official attributed to the population census. “Due to census, the process of rebasing was delayed by one year and is taking more delays,” he added.