Volume 1: Consumer Price Indices

Botswana

Official title

National Cost of Living Index.

Scope

The index is computed monthly and covers all households in urban and rural areas.

Official base

September 1985 = 100.

Source of weights

The weights and selected items were derived from the results of a household expenditure survey conducted during the latter part of 1978 and the first three quarters of 1979. It covered 915 urban households and 1,221 rural households in the four main towns and 13 villages with populations of more than 3,000 at the time of the 1971 census. Although the number of items and the weights were revised, the weights were not adjusted to take into account price changes between the survey period and September 1985.

In selecting the items for the index, attempts were made to ensure that each sub-group contained all the most important items in that sub-group as well as a selection of the items of lesser importance to represent all other items covered by that sub-group. Consequently, many of the items in the index were chosen not because they are themselves particularly important but because they represent a wide range of consumer goods.

Weights and composition

Major groups	Number of items (a)	Weights	Approximate number of price quotations
Food	48	36.65	2970
Beverages and tobacco	7	3.43	270
Clothing and footwear	13	10.84	717
Rent, fuel, light, water	16	13.07	239
Household items and operation	24	13.70	1069
Medical care	6	1.30	127
Transport and communications	18	10.54	129
Other goods and services	20	10.46	582
Total	152	100.00	6103

Note: (a) Although national weights are not directly used in the computation of the index, they are given for reference purposes.

Household consumption expenditure

Consumption expenditure for the purpose of the index includes expenditure on cash and credit purchases of new and second-hand goods. It excludes income in kind and own-produced goods consumed by the household, life insurance premiums, pension and social security contributions.

Method of data collection

Prices are collected every month from representative retail outlets in selected towns and villages throughout the country, in particular in four urban areas, eight large villages and five small villages.

All types of shops are represented in the price collection exercise: large, medium and small. About 330 retail outlets are visited each month. Prices are collected by officers from Central Statistical Office in Gaborone who visit all the areas during the first two weeks of the month. About 6,100 price quotations are collected every month.

Domestic servants' wages are collected every three months in Gaborone. Some prices are ascertained through telephone calls. Discounts, sale prices and free-market prices for items which also have official prices are used whenever they exist.

Only cash purchases are taken into account.

Price collection is carried out in accordance with the Statistics Act of 1976. This Act requires that respondents provide the data asked for but at the same time requires Central Statistics Office to treat the data as strictly confidential and not to reveal it to any person, organisation or other Government department outside Central Statistics Office.

Housing

Rent quotations are obtained from the Botswana Housing Corporation and from a quarterly survey conducted by the Central Statistics Office on the average private rent paid by tenants of one-room accommodation in Gaborone. However, the price quotes derived from these surveys are used for all urban areas, not just for Gaborone. The changes in rents in Gaborone are likely to give a reasonable indication of changes in the rest of the country. Owner-occupied housing is represented by the interest payable on land and repayments of loans for building materials.

Specification of varieties

Both detailed and broad specifications are used. For items with detailed specifications, the descriptions include the brand, make, quality, size, etc. For broadly specified items, general descriptions are given and store-specific items are selected.

Substitution, quality change, etc.

The item descriptions remain unchanged throughout the life of the index series. However, it may be necessary to make certain changes to the constituents and the item descriptions are amended accordingly. When this happens, a base price is imputed for the replacement item by assuming that its price increased from September 1985 at the same rate as that of the old item.

In this way, if a given shop has no stocks of the 250g pack of butter, no use is made of the price of the 500g pack. This is because it is not essential that a price is available for every item in every shop. Instead, all the price quotes for the 250g pack of butter from all shops within the same area are averaged and the average is compared with the base price for the item in that area. If a few shops do not have it in stock, this does not matter, provided at least one outlet in that area does have it in stock so as to provide an average price for it in that area. The following month the same item description for a 250g of butter appears on the questionnaire for that shop. This method assumes that the number of errors caused by pricing an item that does not exactly match the item description will be reduced.

Seasonal items

There is no special treatment for seasonal items.

Computation

The index is computed according to the Laspeyres formula as a weighted arithmetic average with fixed base, using weights corresponding to 1978-79.

The price relative for each item in each area is first calculated by dividing the average price for the current period by the average price for the base period. The relatives are then used to compute separate indices for low-, middle- and high-income group households in urban areas and for large and small villages in rural areas.

All-income group indices for the urban areas are calculated as the weighted averages of the three income group indices, taking into account the average consumption expenditure in urban areas. The national index is the weighted average of the urban and rural indices using the population of urban and rural areas as weights.

Other information

Major sub-group indices are published for this index. Separate all-items indices are also published for urban areas and rural areas.

New series relating to urban areas, rural areas and the whole country (base November 1991 = 100) are now computed, but the relevant methodological information was not available in the ILO at the time the present volume was published.

Organisation and publication

Central Statistics Office: Statistical Bulletin (Gaborone), (quarterly).

Idem: Cost of living index 1985, November 1985.

Idem: Consumer Price Statistics.