Hong Kong, China
Official title
Consumer Price Index (A).
Scope
The index is compiled monthly and covers about 50 per cent of
all households in Hong Kong, with a monthly expenditure between
4,000 and 15,999 dollars during October 1994-September
1995.
Official base
October 1994-September 1995 = 100.
Source of weights
The weights were obtained from the household expenditure survey
conducted from October 1994 to September 19950, covering all private
households in both urban and urral areas of Hong Kong, excluding
seamen's households and collective households. Households receiving
public assistance were covered as a special part of the HES. Households
absent from Hong Kong during the survey reference period were excluded.
About 5,590 households were covered by the survey. The 12-month
reference period was divided into 26 bi-weekly cycles. Each
co-operating household was asked to take part in one cycle, during
which all household members aged 12 and over were asked to record all
expenditures incurred in the reference fortnight in specially-designed
diary books. They were also asked to recall expenditures incurred in
a reference quarter on selected infrequently-purchased items (such
as motor cars, refrigerators and jewellery).
SAMPLING
The criteria adopted for selecting items for price collection are as
follows: (i) the weight of a selected item should not be so small that
a significant change in the average price of the item has a negligible
effect on the overall CPI; (ii) the items, in total, should represent
practically the full consumption pattern of the households covered by
the CPI; (iii) the number of items selected should be close to that for
the old CPI series, so as to maintain continuity between the old and the
new series. Items with a weight of at least 0.0035% according to the HES
results were selected. The weights of non-selected items were distributed
proportionately among the selected items within the same group.
The number of outlets from which price data are obrained varies for
diferent items. In general, this ranges from 1 to 4.
Weights and composition
| Major groups
| Number of items
| Weights
| Approximate number of price quotations
|
| Food
| 387 | 41.2 | ...
|
| Alcoholic drinks and tobacco (for home consumption)
| 16 | 2.45 | ...
|
| Housing
| 26 | 20.56 | ...
|
| Fuel and light
| 5 | 3.18 | ...
|
| Clothing and footwear
| 113 | 4.56 | ...
|
| Durable household goods
| 110 | 4.92 | ...
|
| Transport and vehicles
| 52 | 7.20 | ...
|
| Services
| 104 | 10.05 | ...
|
| Miscellaneous
| 147 | 5.88 | ...
|
| Total
| 960 | 100.00 | 40000
|
Household consumption expenditure
Household expenditure refers to consumption expenditure on goods and
services (including payments in kind), and does not include business
expenses, remittance, betting, income tax, life insurance premiums of
the endowment type, house mortgage payments, investments in properties
and stocks and shares or various other payments of a savings nature.
Generally, expenditure includes the payments actually made for goods and
services during the reference period, irrespective of whether these
goods and services were acquired or consumed during that period.
However, for payments by credit card or on credit accounts, the amount
of expenditure signed for during the reference period was recorded, but
not the amount settled in the credit account bills received in that
period. Some special cases were treated as follows:
Income in kind was counted as both income and expenditure to the
household and included accommodation provided free or subsidised by
employers, medical expenses and expenditure on petrol reimbursed by
employers, and any allowance made for items obtained from employers at
concessionary prices. The full retail value of such items was recorded
as expenditure and the difference between the retail and concessionary
prices was added to income. Fringe benefits such as free meals, free
transport and free medical care were not recorded due to the practical
difficulties in quantifying such benefits.
For owner-occupier households not paying rent, rent was imputed on
the basis of the fair market values. This imputed rent was taken as
both income and expenditure, using the rental equivalence approach.
For durable goods obtained on a hire-purchase (instalment credit)
basis, the full cost of the item at the time of purchase was recorded as
the expenditure rather than the down payment. Therefore, for hire
purchases made during the reference period, the respondent was required
to recall the cash price which he would have paid if he had purchased
the item by one payment. By the same token, instalment payments made
during the reference period for durable goods acquired before the
reference period were not included.
Payments actually made for second-hand purchases were recorded as
expenditure. Anything bought by part-exchange was recorded as
the net amount of payment, plus the estimated amount allowed in
part-exchange where this was quantifiable.
Licence fees, insurance for specific consumer goods and health care
were treated as normal consumption expenditure. Contributions to social
insurance and pension funds, income taxes and other direct taxes and
life insurance payments were treated as non-consumption expenditure.
Remittances, gifts and similar disbursements and cash contributions to
other households were not treated as normal consumption expenditure.
Gifts received were treated as normal consumer goods and included in
household expenditure.
Method of data collection
Prices are obtained from selected outlets in the most populous urban
areas, divided into 12 pricing districts. Prices are collected mainly
by personal visits to selected outlets and sometimes by telephone.
Prices are collected three times a week for all fresh food items, with
the exception of fresh fruit, pork, beef, eggs and rice for which prices
are obtained each week. Other items are priced every month, two months,
quarter or year. For certain items such as public transport, public
house rents, water charges, petroleum and oil and vehicle licence fees,
price changes are taken into account whenever they occur. The prices
used in the index are the retail prices actually paid by consumers.
Discount prices are accepted only if the items on discount are regular,
up-to-date merchandise in good condition and are available for sale in
reasonable quantities to all customers.
Housing
There are two types of dwellings covered by the rent data, namely,
governement-subsidised (public) dwellings and private dwelings.
Rent quotations for private dwellings are collected through a
monthly sample survey. Rent data are collected for both the current and
previous months for all dwellings in the sample.
The dwellings are then post-stratified according to floor area. The
total rent paid by households in each stratum in both the current and
previous months is then calculated and the relative change computed.
These rent relatives
for different strata are pooled to arrive at
an aggregate index using a set of weights determined in the 1994-95
household expenditure survey, and then linked to the base period. Rent
changes for government-subsidised dwellings are taken into account when
they occur on the basis of the information supplied by the authorities
concerned. For owner-occupied housing, the rental equivalence approach
is adopted, whereby the cost of owner-occupied housing is assumed to
move at the same rate as the rent for privatly rented dwellings. The
rent relatives compiled for each stratum as described above are also
aggregated using the weights for owner-occupied housing to arrive at a
monthly index.
Specification of varieties
A store-specific pricing approach is used in which the items
to be priced are only broadly defined. However, detailed
specifications showing the variety, quality, make, brand, unit
are recorded for each price quotation during the
field interview. Interviewers ask the respondents in the sample
outlets to specify the most populat varieties
their outlets at that time, i.e. those with the largest sales
volume. If the most popular varieties for the
current month remain the same as those for the previous month,
their prices in the current month are collected. Otherwise, some
other more popular varieties are selected for the current month
and their prices in both the current and previous months are
collected for splicing purpose.
Substitution, quality change, etc.
A splicing method is used when the quality of an item changes.
Prices for a new quality are collected for two consecutive
months before it is incorporated into the CPI.
If the product is entirely new and cannot be classified under
any item in the existing list of items for which prices are being
collected, the price of that product will not be collected
until the next CPI revision. On the other hand,
if the product is only a new brand of an existing item, then
a splicing method is used. If an item disappears from the
market, the price of a similar item is collected as a substitute.
Seasonal items
Seasonal fresh food items are omitted from the index during their
off season and their weights are distributed among the other
items in the same group. For non-fresh food items, the last
season's prices are kept constant until the next season.
Computation
The index is computed according to the Laspeyres formula as a
weighted arithmetic average with fixed base, using weights
corresponding to the base period. Two methods are used for computing
item indices. For homogeneous items, price relatives are
calculated by dividing the average price for the current period by
the average price for the base period. Price relatives for other
items are calculated for each variety in each outlet by dividing
the average price for the current period by the average price for
the previous period, and the average of these relatives is
computed to arrive at the item indices.
The average prices of some essencial food items are realised in the
monthly CPI Report.
Other information
In addition to the CPI (A), three other consumer price indices are
published in Hong Kong on a monthly basis. One is the 1994-95
based Consumer Price Index (B) (CPI (B)), which is also compiled by the
Census and Statistics Department of the Hong Kong Government. This
index refers to households spending between 16,000 and 29,999 dollars a
month during October 1994-September 1995, the period in which the
1994-95 Household Expenditure Survey was conducted. The other is the
Hang Seng Consumer Price Index (Hang Seng CPI), which is compiled by the
Hang Seng Bank, a private organisation. This index refers to households
living in private housing, with an average monthly expenditure of
between 30,000 and 59,999 dollars in 1994-95. The CPI (B) covers about
30 per cent of households in Hong Kong and the Hang Seng CPI
about 10 per cent. In addition, a Composite CPI is also compiled by the
Census and Statistics Department based on the expenditure patern of all
households taken together.
Organisation and publication
Census and Statistics Department, Consumer Price Index Section:
Consumer Price Index Report
(Hong Kong).
Idem: Hong Kong Monthly Digest of Statistics
(Hong Kong).