Volume 1: Consumer Price Indices

Colombia

Official title

Indice de los precios del consumo - familias de ingresos bajos (Consumer price index - low-income group).

Scope

The index is computed monthly and covers urban households with low incomes.

Official base

December 1988 = 100.

Source of weights

The weights and selected items were derived from a household expenditure survey conducted between March 1984 and February 1985 among private households, which was used as the basis for defining the reference population of the index. Thus the consumer price index refers to a social group which is as wide as possible and sufficiently homogeneous in its consumption habits to constitute the reference population.

The reference population was defined as the total number of private households situated in the urban areas of 13 cities; single-person households and collective households were excluded because of their special consumption patterns, as well as very high-income households with widely varying consumption patterns (such exclusions account for 5 per cent of all households surveyed in each city).

Items were selected on the basis of the following criteria: the relative weight of the expenditure: at least 5 per cent within the group; frequency of acquisition observed: the item must be purchased by more than 30 per cent of households; the feasibility of identification, &ie of observing prices and quantities purchased.

The weights were not adjusted to take account of price changes between 1984-1985 and 1988.

Weights and composition

Major groups	Number of items	Weights	Approximate number of price quotations
Food	77	42.58	2540
Housing:	@	@	7341
Rent	1	19.35	...
Fuel, light and water	5	4.82	...
Furniture, furnishings, cleaning products, household linen	28	7.14	...
Clothing	24	8.16	1715
Medical care	13	3.30	1037
Education and recreation	18	4.79	990
Transport and communication	12	4.03	420
Miscellaneous	16	5.84	1039
Total	194	100.00	15082

Household consumption expenditure

This includes only expenditure for the acquisition of goods and services for final consumption. The index therefore excludes expenditure on financial transactions, payment of taxes, fines, etc.

Following the exclusion of this expenditure, which is taken into account in the survey on incomes and expenditure but which does not correspond to the concept of consumption expenditure, the remaining expenditures were grouped together into categories according to production function and in line with the structure of the price index.

Income in kind consumed by the households is imputed to the expenditure on the relevant goods and services; owner-occupied housing is imputed to the weights of rent, but only rent data are collected. The purchase of used goods is treated as any other acquisition; social security contributions are considered as a deduction from income.

Method of data collection

Prices are collected by agents from retail outlets and service establishments. In addition, another kind of source is used for the Rent sub-group under the Housing major group: tenants are asked directly how much they pay for the rent of their housing.

Other sources include the municipal public undertakings which provide information on the rates applied for water, sewage, electricity and telephone services, and town halls which provide the decrees establishing the rates applicable on the urban transport system.

For food prices, the month is divided into three equal periods in which data are obtained from one-third of each group. Thus, although the sources are surveyed each month, prices are obtained in three periods throughout the month. Data are collected each month for items such as public services (water and sewage services, electricity and telephone) and airline tickets, the cost of which varies from month to month.

Where establishments provide data during visits by agents, prices are collected every month except for the following items:

every two months for cleaning products, medicaments, personal hygiene items;
quarterly for clothing, furniture, household appliances, school supplies;
annually for school inscriptions, fees and texts.

These periodicities were established because of the relative variability of prices of goods and services over time.

For some items (gas, cooking paraffin, petrol for automobiles, lotteries and cinema admission in particular) prices are collected in the period in which the variation occurs.

The prices observed or collected are those paid by the consumer for goods or services on sale for cash in retail outlets at the time when the data are collected at the source establishment.

Housing

The data concerning rents are collected every four months but every month the index includes price variations for one-quarter of the sample with the remainder being included without variation.

House rent includes only the cost of the actual rent of private households. Data are collected by means of direct interview. Owner-occupied dwellings are not surveyed.

Specification of varieties

Once items have been selected, their qualities are defined as varieties, for which prices are to be collected periodically for each of the items. A study of the 13 index cities was carried out in January 1987 for this purpose, which established detailed specifications for the items. It was decided that the items selected in each of the sub-groups should:

show a price evolution similar to that of the other items in the sub-group;
be commonly consumed by households in the respective socio-economic stratum;
offer reasonable guarantees of remaining on the market;
be easily observable.

Substitution, quality change, etc.

If it is not possible to continue recording the price of a specification previously used, or if it is necessary to replace the source establishment, the change of reference procedure is used; this method enables variations in prices due to a change in the specification of the item or the source of information to be cancelled out. However, for the clothing sub-groups, in which the references and specifications are subject to many changes, each new element appearing in the collection of data is analysed to enable a decision to be taken regarding the validity of the price variation recorded.

Seasonal items

No special treatment is given to seasonal items.

Computation

The index for each city is computed according to the Laspeyres formula as a weighted arithmetic average with fixed base, using weights corresponding to March 1984-February 1985.

The index for an aggregate (sub-group, group, city, the whole country) is the weighted average of the elementary indices, with the weights used in the computation of the index corresponding to the structure of expenditure by low-income families in the various spatial units (13 cities) covered.

Other information

Other indices are computed for urban middle-income families (employees) and all families in the country (low and middle incomes) and for 13 cities separately (all families, low-income families, middle-income families).

Detailed sub-groups are published.

Organisation and publication

Departamento Administrativo Nacional de Estadística: Boletín Mensual de Estadística (Bogotá).

Idem: Boletín Mensual de Estadística (Bogotá) No. 433, April 1989 (for more detailed methodological information).