Saudi Arabia 1
Official title
Cost of Living Index (All Cities Index).
Scope
The index is compiled monthly and relates to Saudi and non-Saudi
households in the following ten cities: Riyadh, Jeddah, Damman, Abha,
Buraydah, Makkah, Medinah, Taif, Hofhuf and Tabuk.
Official base
1988 = 100.
Source of weights
The weights and selected items were derived from the 1985-86 household
expenditure survey which lasted a full year. The reference period for
reporting monthly expenditures for each household was one month. The
survey was conducted in 15 cities, the 10 cities mentioned above and
five smaller cities. All geographic regions were represented in the
survey. The household sample was an area sample and the specific
households were selected randomly. In all, approximately 15,000
households were initially surveyed. The weights used in the Cost of
Living Index were a combination of cost (based on family expenditure
data) and population. No national accounts data were used.
Items were selected for the Cost of Living Index using probability
proportionate to size (PPS) methods, as well as random methods for
certin items. Over 200 items are included in the item sample. The
weights of those items not selected are imputed monthly by the movement
of the group that the
Unpriced items
fall in.
Weights and composition
| Major groups
| Number of items
| Weights
| Approximate number of price quotations
|
| Food
| 87 | 32.62 | 6090
|
| Housing (incl. fuel, light and water)
| 7 | 19.69 | 353
|
| Clothing and footwear
| 29 | 8.40 | 725
|
| Furniture and furnishings
| 36 | 9.38 | 900
|
| Medical care
| 7 | 1.24 | 175
|
| Transport and communication
| 8 | 17.30 | 200
|
| Entertainment and education
| 15 | 2.95 | 375
|
| Other expenditure
| 13 | 8.42 | 275
|
| Total
| 202 | 100.00 | (a) 9093
|
Note: (a) Judgement, based on past pricing experience, is used
to determine the number of prices for each item. Seven prices
are collected for each food item and five prices for each
non-food item. More prices are obtained for food items because
of their variations.
Household consumption expenditure
Consumption expenditure does not include taxes, insurances or
owner-occupied housing.
Method of data collection
Retail stores and other outlets were selected from the results of a
retail outlet survey. The Central Department of Statistics (CDS)
collects seven prices for each food item in each city each month.
Non-food items are priced every month, covering half the items in
alternate months. Five prices are collected for most non-food items,
except for items whose prices are set or controlled by the government.
For example, prices for electricity, telephone charges, gasoline, etc.
are held constant until there is a price change. Price changes for
these items are announced in the daily newspapers. Medical care prices
are collected by visits to physicians offices or hospitals. Education
prices are collected from a sample of schools in each of the ten
cities. Transportation prices are collected by visits to the airline
offices, bus companies, etc. Airline charges are for both domestic
and international flights. For telephone charges, a combination
of the basic service charge plus charges for long-distance calls are
used.
In general, all prices are collected by personal visits by trained
data collectors. Prices are collected randomly from the 1st to the 21st
of the month. Data collectors are instructed to collect any given
outlet's prices at approximately the same time each month so certain
outlets may be priced around the 5th of the month, others are priced
around the 20th, and so on. An outlet priced around the 5th of the
month is not priced the following month around the 20th.
Data collectors are instructed to request the most common price of
the item. If discounts are normally given, this is the price they
record.
Sale prices are treated as any other price. The price is entered
and, when calculated, would show a decrease from the previous regular
price. A number of food staples are subsidised (official prices) and
there are no lower prices than these. There are no black market prices.
Hire purchase or credit terms do not apply in Saudi Arabia (no items
are leased in the index).
No second-hand goods are priced. Data collectors are instructed to
price up-to-date merchandise available in saleable quantity.
Import prices are treated as any other prices. In Saudi Arabia, many
items are imported. The data collectors identify the country of origin.
Housing
A detailed rent schedule is completed by the data collector and includes
whether or not utilities are included in the rent, whether or not the
rental unit has air conditioning, etc. Both villas and flats are
priced. The rental sample in each city is divided into six panels with
each panel being priced every six months. One-sixth of the price
movement of rents in each city are applied to the rental cost-population
weights. These are aggregated for all 10 cities and a Kingdom-wide rent
index is calculated.
Owner-occupied housing is not priced in the housing component of the
index.
Specification of varieties
The CDS has detailed specifications for all items in the index. These
require the data collector to enter the variety, type,
make, brand, serial number, and country of origin,
etc. The data collector needs to enter as much information as
possible so that he can price the same, or a comparable item, in
the following pricing period.
Substitution, quality change, etc.
If an item is priced which has a different size or
weight from the previous item, the price of the previous item is
converted to a comparable weight so that an accurate comparison can be
made. Because of the lack of data to adjust for most quality changes,
no effort is made to adjust for these and new items are linked into the
index.
The index is revised at five-year intervals.
New products which enter the market between revisions are not priced
but may be captured in the next consumer expenditure survey. If a new
product enters the market for an item that is already being priced, the
data collector does substitute it unless the previously priced
item is not available and it is the closest available substitute.
If a given type of quality disappears from the market, as has
occurred on occasion, the weight of the item is initially
imputed by the movement of that group. If it is certain that the item
will no longer be stocked or sold, instructions are sent to the computer
centre to include the weight for that item in the weight of the unpriced
items category. The unpriced items category is also imputed by the
movement of prices for that specific group.
Seasonal items
Seasonal items are priced when they are available. For example, certain
fruits and vegetables are very plentiful at certain times of the year.
Prices, of course, are lower then. As the supply diminishes, prices
rise. If data collectors are unable to price a given item, they enter
on the price schedule that the item is unavailable and the item is not
priced until it is again available in the market.
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.
The relatives of average prices for the current and previous periods
are used to calculate item indices. The index for all cities is an
aggregate of the ten primary sampling units (PSU). A weight reflecting
estimated current expenditure for the base period market basket is
determined for each item, in each PSU. The population of each PSU is
used to combine the weights of each item, in order to obtain the final
weights for all cities.
Other information
Detailed sub-group indices and cities indices are also published. The
Central Department of Statistics also publishes a Middle-Income Index.
Organisation and publication
Ministry of Finance and National Economy, Central Department of
Statistics: The Statistical Indicator
(Riyadh).
Idem: Statistical Yearbook
.
Idem: Cost of Living Index
.