Every Jamaican loves to be gifted with a basket of goodies. More interestingly are the goods that actually make up that basket?

Speaking last week at the Bank of Jamaica’s (BOJ) second of two seminars on ‘Demystifying Inflation’, Carol Coy, director general of STATIN evinced that much of the items that make up the inflation basket are goods and services purchased by private households.

“The Consumer Price Index (CPI), which is used to measure inflation, is a weighted basket of goods and prices purchased by the consumers. This basket is updated regularly based on consumption levels with currently over 500 commodities making up the basket.

“The Household Expenditure Survey (HES) determines what makes up the CPI basket, much of which are those goods and services that are more popularly consumed.

“Among the top CPI categories, food and beverage are heavily weighted and accounts for the largest portion of approximately 37.4- 40 per cent. Following behind is transport alongside water and housing with 12.8 per cent each; these three represent the biggest group of CPI weights in the basket.

“Other items that are featured in the basket include: Alcoholic beverages and tobacco, clothing and footwear, furnishings and household equipment, health, communication, recreation and culture, education, restaurants and hotels, and miscellaneous goods and services which would include everything else not found under a category,” the STATIN director general revealed.

Interesting to note as pointed out by the presenter is that the “CPI does not reflect an individual’s personal inflation experience nor does it measure changes in people’s standard of living”.

“What it does, instead, is track the price of a fixed quantity/goods and consumers’ personal experience with the good/service.

“What the CPI does then in relation to the goods in the basket, is look at price movements and not impacts. Hence, whatever is heavily weighted in an individual’s basket will be based on what this individual is able to afford based on consumption habits,” Coy stated.

More interesting to note is that the current set of goods in the basket are those from the 2004/2005 Household Expenditure Survey (HES), which is over 10 years old. This as opined by some of the attendees at the seminar, may be outdated and not reflective of our current realities.

This may be so as evolving trends such as eating out and communication via use of cellphone and data consumption may result in increased weights and prominence for other goods and services within the basket.

The STATIN boss also alluded to this and indicated that the data from a more recent HES conducted in 2017 is currently being processed; a new CPI is set to be released in the first half of 2020, based on a new basket of goods.