Much-awaited inflation rebasing mechanism to be implemented soon: PBS

The much awaited new inflation rebasing mechanism is likely to be implemented within a month or two as the new government has already come into power to give formal approval for its execution.

The population census exercise and transfer of power from one political government to another had caused delay in implementing the new rebasing, which was earlier scheduled to be completed in June 2017 and then by June 2018, official sources told APP.

Earlier, due to population census exercise, the then government had given one year grace period till June 2018 to complete the process, they said, adding that the process was further delayed due to general elections 2018.

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 2018), however the Governing Council had not approved the summary to make it effective during the interim setup, sources said.

 “We have already finalized rebasing mechanism and are doing in-house parallel exercise for its execution, however its implementation with base year 2015-16, still requires formal approval from the Governing Council,” they said adding, now that the new government has come into power, so it is expected that it would be approved and implemented soon.

The sources said that the new PBS Secretary has also been given briefing in this regard, who would also help expedite the process.

A top official of PBS told APP that the bureau was very much interested 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.

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.

(APP)