Govt is reviewing CPI, says PM

Govt is reviewing CPI, says PM

There are 1 comment on the thestar.com.my story from Jul 14, 2008, titled Govt is reviewing CPI, says PM. In it, thestar.com.my reports that:

KUALA LUMPUR: The Government is reviewing the Consumer Price Index , which has been criticised as not reflecting the reality of existing economic conditions Prime Minister Datuk Seri Abdullah Ahmad Badawi said ...

Join the discussion below, or Read more at thestar.com.my.

Ismail

Malaysia

#1 Aug 1, 2008
With reference to the following report in the Star,
"Monday Jul 14
Govt is reviewing CPI, says PM
KUALA LUMPUR: The Government is reviewing the Consumer Price Index , which has been criticised as not reflecting the reality of existing economic conditions Prime Minister Datuk Seri Abdullah Ahmad Badawi said ..."
Re-examining the fact that
'Malaysia's consumer price index is currently calculated based on retail prices of 460 items in nearly 25,000 outlets nationwide. The items are categorised under 12 groups, including food and nonalcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; and transport.', several pertinent issues come to mind:
(i) one would question as to how the 25,000 outlets are selected - I was told that the selection of outlets is based on purposive rather than the more scientific probability sampling; purposive sampling is unacceptable to professional economists and the academic community, inspite of the usual claims of CPI's compliance to international standards & ISO;
(ii) with purposive sampling, the margin of error of the CPI could not be assessed, while unbiasedness and precision could be achieved with less sample of outlets if probability sampling is employed; and
(iii) if the government still insists on continuing with purposive sampling, the CPI should not be the monopoly of a single agency - the state economic planning units could come up with CPIs for their respective states, possibly with classification breakdowns more relevant to our own needs.

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