Volume 1: Consumer Price Indices

Singapore

Official title

Consumer Price Index.

Scope

The index is computed monthly and covers households with monthly expenditure of between 500 and 4,999 dollars during 1987-1988.

Official base

September 1987-August 1988 = 100.

Source of weights

The weights and selected items were derived from a household expenditure survey conducted during September 1987-August 1988.

The spending pattern of households with monthly expenditure of between 500 and 4,999 Singapore was used to derive the weighting pattern. This group of households made up 90 per cent of the total number of households surveyed.

The survey covered the whole country and a representative sample of all private households with at least two persons in the main island of Singapore. One-person households and foreign resident households were outside the scope of the survey. Personal interviewing was used, and the survey was spread over a period of twelve months from September 1987 to August 1988. The first group of households was covered in the reference month September 1987 and the last group in August 1988. In the final analyses and tabulations, the records of 5,742 households were used.

The criteria for items to be selected were their relative importance, their price movements being typical of similar or related items and their pricebility i.e. whether they are available for regular pricing. Items that are relatively insignificant, or have no meaningful quantitative units or whose specifications are not standardised, were excluded for pricing purposes, but are nevertheless indirectly represented by the selected similar or related items. Their shares of total expenditure were assigned to selected similar or related items.

Weights and composition

Major groups	Number of items	Weights	Approximate number of price quotations
Food	272	3977	8424
Clothing and footwear	65	570	382
Housing:	71	1717	1011
Rented accommodation	4	110	224
Owner-occupied accommodation	7	603	382
Repairs and maintenance	4	226	34
Fuel and light	8	456	42
Household durables	48	322	329
Transport and communication	38	1450	255
Miscellaneous:	147	2286	1904
Education	34	500	322
Health	22	249	403
Recreation and entertainment	15	295	110
Alcoholic drinks and tobacco	12	282	175
Other goods and services	64	960	894
Total	593	10000	11976

Household consumption expenditure

Consumption expenditure used for deriving the weights refers to payments incurred for goods and services acquired by households during the survey month. For items purchased on credit, the amounts were recorded on the days the items were acquired. For items or goods withdrawn from own grocery shops or farms, the amounts imputed at current market value were recorded as expenditure. For large but infrequent expenditure, such as on consumer durables, vacation travel and major house repairs and renovations, householders were asked to record the expenditure with a recall period of 12 months ending with the survey month, and one-twelfth of such value was used as expenditure for that month. For the trade-in of used goods and in part payment for new ones, the net payment was used, i.e. the difference between the price of new item and the trade-in value of the old one. The same applied to second-hand purchases. Central Provident Fund contributions and other non-consumption payments such as income tax, loan repayments, properties, stocks and shares were excluded, as well as gifts. Licence fees, house insurance, and health care were considered as consumption expenditure, and the actual payments for such items were recorded.

Method of data collection

The frequency of pricing varies according to the price behaviour of the item. Items whose prices fluctuate frequently, such as perishable food items, are priced thee times a week at market stalls. Prices of provisions and sundries which do not fluctuate as often as those of perishable food items are collected each week. Prices for items with greater price stability, such as clothing, textiles, haircut services, tailoring charges, crockery and furniture are updated once a month. Changes in the prices of items such as Mass Rapid Transit, bus and taxi fares, cinema admission charges, utility charges, maintenance and conservancy charges for flats, government medical fees and school fees are incorporated in the index when they are revised.

Prices of perishable food items are collected on Tuesdays, Thursdays and Fridays, and those of provisions and sundries, every Wednesday. For the monthly surveys, prices normally refer to those as at 15th of the month.

Information pertaining to the places usually patronised by consumers for their marketing items, provisions and clothing was obtained from respondents during the household expenditure survey. This was used as a guide in the selection of outlets, supplemented by information from the Department's Survey of Wholesale and Retail Trades and Survey of Services from which a list of large outlets was drawn up for each type of commodity. Generally, the outlets selected for food items were mainly drawn from densely populated areas, particularly those in large public housing estates. For non-food items such as ready-made clothing and footwear, furniture, household equipment and appliances, prices are collected mainly from shopping centres which have a large concentration of retailers specialising in the respective items.

The prices of perishable food items from markets and those from provision shops and crockery shops are collected by personal visits, while prices of other items are obtained through mailed questionnaires. Electricity, gas and water tariffs are obtained directly from the Public Utilities Board. Medical care costs (hospitalization fees and medical treatment fees) are collected via postal questionnaires from both private and government hospitals and clinics. Education costs (tuition fees for every level of education) are obtained directly from the Ministry of Education, tertiary institutions and other private institutions. Transport and communication costs (prices of cars, motorcycles, petrol and other running costs) are obtained from the respective respondents in the retail trade. For public road transport, fares for buses and subways are supplied by the Singapore Bus Services and Mass Rapid Transit Corporation. Air fares are ascertained from the sales offices of selected airlines. Charges for postage and telephone rentals are collected from the Singapore Telecom.

At any one time, there are six field interviewers visiting the selected outlets. Four field interviewers go to the market every Tuesday, Thursday and Friday to collect prices of fish, vegetables, meat, fruits etc. On every Wednesday, they are assigned to visit the provision shops where prices of dried goods and sundries are obtained. Other items which require personal visits such as textiles, cooked food, ladies' clothing etc. are priced on Mondays.

Discounts or other sales promotion gimmicks are ignored. The prices of such items are not used in the calculation of index or average prices. Sale prices are included when they are genuine reductions and widely available, i.e. they become the pre-dominant prices. Regarding hire-purchase and credit terms, only the prices charged in normal cash transactions are used.

The number of price quotations for an item depends on its relative importance, the volatility of its price and whether its price is controlled by a central agency.

Housing

Rent is the only item included under rent. Data on rents for public flats, private flats, bungalows, semi-detached, terrace houses and chophouses are collected each quarter in January, April, July and October. The selected households are divided into two groups and each group is surveyed only once in six months, i.e. one group is surveyed in January and July and the other group in April and October each year. There is no need to survey the same houses more frequently as most rented houses have fixed-rent contracts for one or two years. For the collection of rent data, postal questionnaires are sent to the selected households for their completion, stating the current rent, the rent paid six months ago, duration of the lease the tenant signed with the landlord and details of the furniture and consumer durables provided (if any). The rents for the various types of flats and houses have different weights in the Consumer Price Index. For each type of flat or house, an index is computed using the average of price relatives based on the rent data collected. The indices for all types of flat or house are then weighted to produce the overall rent index.

For owner-occupied accommodation, the rental equivalent approach is used, and the expected rental the owner would have to pay if he were the tenant was imputed by government assessors. The imputed rents of a sample of owner-occupied houses are ascertaing each quarter from the Valuation and Assessment Division of the Inland Revenue Department.

Specification of varieties

To ensure that price changes are not caused by quality changes, detailed specifications of the items are provided to assist the field interviewers or the retailers of the items, such as the brand, quality, material, size, unit of measurement and country of origin that clearly distinguishes it from those with similar generic descriptions. Such detailed specifications were first obtained when the field enquiries were carried out. For ladies' clothing items which change with fashions from time to time, in addition to the specifications required such as the design or art number, type of fabrics used, print (plain of floral), sizes and colours available, field officers also sketch the pattern of the items to enable the office staff to consider whether they are suitable for use.

Substitution, quality change, etc.

As far as possible, if the degree of quality change can be quantified, prices are adjusted accordingly. However, if the change in quality cannot be assessed, attempts are made to replace the old item by a new one, when both are available during an overlapping period.

When new products appear, a splicing method is adopted.

If a given type or quality disappears from the market, the Office is usually informed in advance either by the field interviewers or the respondents. Before the old item disappears from the market, the price of the nearest substitute is usually obtained for the overlapping period to enable the application of the technique of splicing price series. If the disappearance is sudden, price is usually assumed to remain unchanged for the month and immediate action is taken to introduce the nearest substitute.

Seasonal items

Most of the items selected in the Consumer Price Index basket are non-seasonal, i.e., their prices are usually available all the time. There are few seasonal items of importance.

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.

Price averages are calculated for each distinct brand by summing the prices obtained and dividing by the total number of quotations. Price relatives are computed by taking the reference month's price divided by its corresponding base year price (average September 1987-August 1988). Missing prices are treated differently depending on the reason for the absence. If the price of a particular brand from a particular outlet is not available, it is assumed not to have changed for the month. Missing prices due to the disappearance of item are linked to the price of the nearest substitute. Faulty price data or doubtful prices are usually clarified and reconfirmed with the respondents.

Other information

Broad components are published at the group and sub-group levels.

Organisation and publication

Department of Statistics: Consumer Price Index, Singapore - monthly CPI report.

Idem: Monthly Digest of Statistics (monthly). Monthly indices are published at the group and sub-group level for the last 24 months.

Idem: Yearbook of Statistics (annual). Annual indices are published for last 10 years.

Idem: The consumer price index, Singapore, based on Household Expenditure Survey 1987-88.