Central bank introduces new CPI basket

Kathmandu, September 17

Nepal Rastra Bank (NRB) has revised Consumer Price Index (CPI) in a bid to capture changes in purchasing pattern brought about by alteration in income level, taste and other factors.

The new CPI basket has allotted a weight of 43.91 per cent to food items and 56.09 per cent to non-food items. The previous consumer basket had designated a weight of 46.82 per cent to food items and 53.18 per cent to non-food items.

The latest change in contribution of food and non-food items is in line with the trend seen since the 1970s, when the CPI was introduced for the first time in the country.

One of the reasons for the hike in weightage of non-food items is the significant rise in house rent and electricity, water, cooking gas and fuel expenses. These items now command a weight of 20.30 per cent in the new CPI basket as against 10.87 per cent in the past.

On the other hand, contribution of cereal grains and their products has fallen to 11.33 per cent from 14.81 per cent.

NRB will make use of the new CPI basket from the existing fiscal year, meaning inflation of the current fiscal year, which began on July 17, will be calculated using the new index. This means the base year to compare changes in consumer prices will be revised to 2014-15 from 2005-06.

NRB updates the CPI basket once every 10 years. This is the fourth time the central bank has revised the index.

NRB revised the CPI based on surveys conducted in 8,028 households of 55 districts for

a year beginning February 13, 2014.

Based on these surveys, NRB has included 496 goods and services in the new CPI basket. The old CPI basket comprised 410 different types of goods and services.