Saudi Arabia 2
Official title
Cost of Living Index (Middle-Income Index).
Scope
The index is compiled monthly and covers middle-income group
households with monthly expenditure between 2,500 and 10,000
riyals 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 covered a full year. The reference period for
reporting monthly expenditure for households 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, or random methods for certain
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
| 85 | 37.66 | 5950
|
| Housing (incl. fuel, light and water)
| 8 | 21.11 | 353
|
| Clothing and footwear
| 26 | 7.93 | 650
|
| Furniture and furnishings
| 31 | 7.42 | 750
|
| Medical care
| 7 | 1.13 | 175
|
| Transport and communication
| 9 | 15.08 | 225
|
| Entertainment and education
| 15 | 2.01 | 350
|
| Other expenditure
| 13 | 7.66 | 300
|
| Total
| 194 | 100.00 | (a) 8753
|
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 for each non-food item.
More prices are obtained for food items because of their
variations.
Household consumption expenditure
Consumption expenditures 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 two months with
half of the items alternately each month. 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 flights 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 e.g. certain
outlets may be priced around the 5th of the month and others
around the 20th. An outlet priced around the 5th of the month would not
be 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, shows a price 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 CLI. 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 CLI 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 already is being priced, the
data collector does not substitute to 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, which has
occurred on occasion, the weight of the item is firts simply
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 base periods are
used to compute 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 an All-Cities 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
.