Statistics Center - Abu Dhabi yesterday issued its monthly report on the consumer price index (CPI) for the month of November 2010, which analyzes the CPI calculations for the month of November 2010 with 2007 fixed as the base year, the report also details CPI results by welfare levels and types of households.
The report shows that the average rise in consumer prices for the first 11 months of 2010 was 3.04%, compared with the same period of 2009, as shown by the rise in the CPI over the first 11 months of 2010 to 119.19 points, up from 115.67 points for the same period of 2009.
According to SCAD’s report, the percentage month-to-month rise in the CPI for November 2010 compared to October 2010 was 0.17%, as the index increased from 121.67 points in October 2010 to 121.88 points in November 2010, suggesting a great deal of stability in consumer prices during November 2010.
As the report reveals, the overall rise of 3.04 % in consumer prices during the first 11 months of 2010 compared with the same period in 2009 has led to an increase of 2.80% in consumer prices for households of the bottom welfare quintile over the same period of comparison. The corresponding rise for other welfare levels was 2.77% for households of the top quintile and 3.26% for the upper middle welfare quintile.
Analyzed in terms of impact by type of household, the overall 3.04% year-over-year rise in consumer prices for the first 11 months of 2010 pushed up consumer prices for national households by 2.70%, compared to 3.57% for non-national households and 2.51% for collective households.
Monthly CPI (January 2009 - November 2010)
The Net Change in Consumer Prices
The report explains that the 3.04% rise in average consumer prices during first 11 months of 2010, compared with the same period of the year 2009, reflects the net change, i.e. the outcome of upward and downward movement in the prices of the consumer basket during the two periods compared.
As SCAD’s report further elaborates, rises in the CPI do not necessarily correspond to higher prices for all the goods and services that make up the consumer basket, nor do they mean that all goods and services have increased by the same percentage (3.04% in this case); for there are goods and services whose prices have risen at rates above the overall rate (3.04%) and others whose rate of increase was below this general average. There are also goods and services whose prices have fallen. However, the net change or the combined outcome of these changes (upward and downward movements) in the prices of the consumer basket during the first 11 months of 2010 compared to the same period in 2009 produced an average increase in prices by 3.04%.
The Largest Rises
The report which sets out the major twelve expenditure groups, as per the international classification, i.e. "Classification of Individual Consumption according to Purpose (COICOP), shows that the "housing, water, electricity, gas and other fuels" group remains the largest contributor to the overall y-o-y increase in prices during the first 11 months of 2010, having accounted for 57.3% of that increase. This contribution resulted from a surge of 4.5% in the prices of this group and due the group’s sizable weight, which constitutes 37.9% of the total weight of all expenditure groups. The main cause underlying the increase in the average price of this group was a rise of 5.1% in the “house rents” subgroup, which makes up 87.7% of the group’s total weight.
The next highest contributor to the overall year-over-year increase in the CPI over the first 11 months of 2010 was the "Food and non-alcoholic beverages group", which accounted for 35.6% of the rise in the index during the aforesaid period due to increases in the prices of most of the subgroups falling under this group.
The “transport” group contributed 17.9% to the year-over year rise in consumer prices for the periods compared as a result of an overall increase of 6.0% in its component subgroups, namely, the “transport services” subgroup which advanced 2.2%, due mainly to a rise of 10.3% in the cost of air transportation. The cost of “operation of personal transport equipment” grew by 7.5%, reflecting an increase in the prices of “fuel and lubricants” by 12.6% and a rise of 1.8% in the prices of “spare parts and accessories of personal transport equipment”.
The “Education” group accounted for 14.7% of the overall increase occurring during the first 11 months of 2010 compared to the same period of 2009, reflecting a surge of 15.2% in “tuition fees”.
Expenditure Groups/Subgroups that Showed Price Drops
On the hand, the main groups that slowed down consumer prices during the first 11 months of 2010 compared to the same period of 2009 was the "clothing and footwear" group, which detracted 26.4% from the overall rise in consumer prices for the period under review, during which the prices of this group retreated by 7.7% as a result of a drop in the prices of the “clothing” and “footwear” subgroups by 6.3% and 22.9%, respectively.
The “communications” group detracted 9.1% from the overall y-o-y increase in consumer prices during the period under review, owing to a drop in the prices of “postal/mail services”, “telephone and telefax equipment” and the “telephone and telefax services” by 3.4%, 14.9% and 4.0%, respectively.
Within the main groups, the prices of the “bread and cereals” subgroup declined by 6.5%, “oils and fats” by 5.4%, “milk, cheese and eggs” by 0.2% and “mineral waters, soft drinks, fruit and vegetable juices” by 0.1%.
A Comparison of Consumer Prices for November 2010/2009
According to SCAD’s report, average consumer prices advanced 4.13% in November 2010 compared with November 2009, as the CPI advanced to 121.88 points in November 2010, up from 117.05 points in November 2009, reflecting net movements in the prices of various goods and services during the periods under comparison.
Looking into the details of the aforesaid rise, the report finds that the largest rise in prices during November 2010 compared with November 2009 was in the” food and non-alcoholic beverages” group which advanced 12.2%, followed by the “transport” group, which showed an increase in price levels by 11.7%, while the “furnishings, household equipment and routine household maintenance” group surged 8.1%. In contrast, the “clothing and footwear” group declined by 9.6% as the “clothing” and the “footwear” subgroups dropped by 8.2% and 23.2%, respectively. The communication group retreated by 0.2% due to a decline of 9.6% in the prices of “postal/mail services” and a fall of 19.9% in the prices of “telephone and telefax equipment”.
The chart below displays the monthly year-over-year inflation rates for the period from January, 2009 to November 2010
Consumer Prices in November 2010 Compared with October 2010
According to SCAD’s report, a 0.17% month-to-month rise was recorded in consumer prices for November 2010 compared to October 2010, as the CPI advanced from 121.67 points in October 2010 to 121.88 points in November 2010, reflecting the net changes in consumer prices over the periods compared.
One of the key expenditure groups that showed observable increases during the month of November 2010 compared to October 2010 was the "food and non-alcoholic beverages" group, which went up 0.9%.
Monthly consumer price index (2007=100) - January 2008- November 2010
Impact of CPI Changes by Households’ Levels of Welfare
Elaborating on the impact of the CPI movement on different welfare levels, the report finds that the rise in consumer prices during the first 11 months of 2010 by 3.04% above the price levels of the same period of 2009 resulted in a surge of 2.80% in consumer prices for households of the bottom welfare quintile for the same period of comparison. The corresponding rise for other welfare levels was 2.77% for households of the top quintile, 3.26% for the upper middle quintile and 3.38% for the lower middle quintile, which was impacted by the largest increase among the five welfare levels.
Furthermore, the corresponding rises produced by the overall 4.13% increase in consumer prices during the month of November 2010 compared to November 2009 were 5.54% for the bottom welfare level, 3.40% for the top welfare level and 4.61% for the middle welfare quintile.
The report also details the impact on different welfare levels produced by the 0.17% increase in consumer prices during the month of November 2010 compared to October 2010, which brought about a rise of 0.18% in consumer prices for the bottom quintile, but affected the lower middle, the middle and upper middle welfare quintiles by rises of 0.14%, 0.16% and 0.15% in consumer prices for the said welfare levels, respectively, while the corresponding rise for the top quintile was 0.20%.
The above chart depicts CPI trends by household welfare level for the period January 2008 to November 2010
Analyzed by impact according to household type, the overall 3.04% year-over-year rise in consumer prices for the first 11 months of 2010 pushed up consumer prices for national households by 2.7%, compared to 3.6% for non-national households and 2.5% for collective households.
The report also reveals that overall 4.13% rise in consumer prices during November 2010 as compared to November 2009 was felt differently by different household types, resulting in a surge of 4.2% in November 2010 consumer prices for national households, compared to corresponding rises of 3.8% and 5.0% for non-national and collective households, respectively.
Finally, a break down by household type of the 0.17% rise in consumer prices for November 2010 compared with October 2010 reveals an increase of 0.20% in consumer prices for the national households segment, while the corresponding rises for non-national and collective households were 0.14% and 0.13%, respectively.
Significance of the CPI
The consumer price Index (CPI) is one of the critically important inputs for the purposes of planning and research in various disciplines. Statistics centers and agencies in different countries consistently compile these indices, which depend on the prices of a basket of goods and services consumed by the household sector. The figures thus calculated constitute a time series that provides a measure of changes in the cost of living over time.
In preparing its CPI reports, Statistics Centre -
follows the methodologies adopted internationally in this field. Abu Dhabi
SCAD’s Price Indices Section has recently developed the computing of the CPI so that it is compiled according to households’ types and levels of welfare. As for the welfare level approach, the population is divided into five segments (quintiles) representing five levels of welfare, based on average per capita annual expenditure. Each quintile reflects the consumption pattern represented by that quintile. In regard to the household type approach, the population is divided into three types of households as set out in the results of the Household Income and Expenditure Survey (2007-2008), namely, national, non-national and collective households.