Do we gain from collecting price data more than once per month ?

Do we gain from collecting price data more than once per month? Nicholas N.N. Nsowah-Nuamah AND Edward Asuo Afram

Introduction NATIONAL STATISTICS OFFICES (NSO) THAT COMPUTE INFLATION NEED TO COLLECTS MARKET PRICES. IT IS A MAJOR DATA REQIREMENT

Market Prices collection NSO NEED TO DECIDE WHETHER TO COLLECT PRICES; • ONCE A MONTH OR • TWICE A MONTH

Advantages of once-a-month market reading • Reduces cost in terms of money, human resources and time • It also enables the release of inflation on time

Advantages of twice-a-month market reading • Inflation is less vulnerable to short-term price fluctuations and better reflects the average monthly prices • Increases precision

Short notes on collection of Market Prices in Ghana • Started from March 1963 and had been one-a-month (2nd week). • Covers the whole country, both urban an rural • Since May 2000 has been twice-a-month (1st and 3rd week)

GSS experience GSS experience on twice-market-price collection in Ghana is that; • supervision is weak during the second price collection • High cost involved • There is pronounced interviewers and interviewees fatigue.

Pertinent questions : • Has the GSS gained from collecting price data twice in a month instead of once, since 2000?

Objective of the paper • The objective of this paper is to assess the deviation of the CPI based on collection of prices once or twice per month so as to enable us make an informed decision on the number of price collection.

Benefits • The analysis provides a statistical/scientific basis for the GSS to take a decision on whether to discontinue the two times data collection and as to which of the weeks (first or third) to undertake CPI price collection.

Methodology • The task was to calculate the rate of inflation for year 2007 using the two sets of data and comparing corresponding levels to see whether there are large differences. The work centred on the following; • 1. Assembling the two sets of data • 1st week data collection for 2006 and 2007 • 3rd week data collection for 2006 and 2007 • Calculating inflation rate from the 1st week prices data with 2002=100 • Calculating inflation rate from the 3rd week prices data with 2002=100 • Comparing the results with the existing method of twice-a-month collection • Perform test of analysis for the significance of the inflation figures

Results;

Results cont. graph of CPI

Results; test of hypothesis

Conclusion: From the test results, we conclude that; • There is not much to gain from the two readings vis-à-vis cost and quality of data • A single reading would be cost effective. Firstly, cost of data collection will be reduced by fifty percent. Secondly, quality data can be guaranteed from a smaller investment. Supervision will be more effective.

Conclusion (Cont’d): • The single reading be taken in the middle of the month • However, owing to the volatility in the price of the petroleum products, we suggest that petroleum prices should continue to be taken twice or more.

Do we gain from collecting price data more than once per month ?