BBS launches new base year today to measure inflation

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Jasim Uddin Haroon

The Bangladesh Bureau of Statistics (BBS) will launch new base year from today (Sunday) to measure inflation, which is expected to depict a more accurate picture of the macroeconomic indicator.

From today, BBS will use fiscal year 2005-06 as reference base year instead of FY 1995-96.

This will result in new weightings for the components of its Consumer Price Index (CPI) basket.

The re-basing will also increase the number of goods in the inflation basket as well.

BBS officials said the review was necessary because most people's expenditure have changed over the time.

The country's national statistical office will also modify baskets of CPI products as consumption pattern has changed over the period of old base year of 1995-96.

Abul Kalam Azad, a joint director of the BBS said: "With the passage of time people tend to spend a lot on one item changing the others. There are shifts both in the consumption and expenditure patterns."

He, however, stated that the methodology for computing the figures will remain unchanged.

"The methodology will remain the same. The same formula will be used--- the same concept will be used. It is only the items that are being reviewed," he added.

BBS uses Marshall-Edgeworth formula for computing CPI.

Satya Ranjan Mondol, director of national accounting wing of the BBS said: "We'll provide inflation level on both new and old base years which will continue for sometime."

BBS sources said more than 75 types of goods will be added to the list of rural areas and nearly 100 items to that of the urban areas.

They said mobile phones, mineral waters and internet are a few of the new items to be added to the new list.

Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh (PRI) said the inflation rate might fall after introduction of new products in the basket.

Mr Mansur said BBS should have taken 2010-11 as base year adding: "Latest base year gives best index."

BBS officials said they usually change base year after every 10 years. This time, they took much time to change the base year.

A base year is the year used for comparing the level of a particular economic index.

The arbitrary level of 100 is selected so that percentage changes (either rising or falling) can be easily depicted.

BBS launches new base year today to measure inflation

 

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BBS sources said more than 75 types of goods will be added to the list of rural areas and nearly 100 items to that of the urban areas.

They said mobile phones, mineral waters and internet are a few of the new items to be added to the new list.

Source: http://www.defence.pk/forums/bangla...ar-today-measure-inflation.html#ixzz22f8IjvfL

With the addition of those items for the rural areas and city areas will there be any changes in the GDP?? If so how much it could be and when we can expect to see the change??

 

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Speculations by economists range from 30%-80%, which means that there is no clear cut answer, only proper calculation after data collection will tell us.

 

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THe title of this news may be misleading. I think, the country's GDP will include 175 new items that the 1995-96 base year did not include. GDP should also include underground economy. This side of economy pays no or little taxes to the govt, but yet it is a part of economic activities.

By the way, recycling of plastics and iron is a big business that cotribute to the economy. Is this activity included in the GDP?

 

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THe title of this news may be misleading. I think, the country's GDP will include 175 new items that the 1995-96 base year did not include. GDP should also include underground economy. This side of economy pays no or little taxes to the govt, but yet it is a part of economic activities.

By the way, recycling of plastics and iron is a big business that cotribute to the economy. Is this activity included in the GDP?

Agreed about the shadow economy part, but valuing these things can be extremely tricky as you have to rely on estimates. Regarding what new items are being included, im not sure about them as information on this topic is very scarce, which is quite frustrating since this is a very important subject.

 

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New GDP base in the offing


New GDP base in the offing

Jasim Uddin Haroon

The Bangladesh Bureau of Statistics (BBS) has said it will introduce new GDP (gross domestic product) base to give a more accurate reading of the country's economic structure.

"We've started preparations for shifting the base of the GDP, and we're now working on the recommendations of the technical committee," Satya Ranjan Mondol, director of national accounting wing of the BBS told the FE on Tuesday.

Earlier, the BBS had formed a technical committee headed by renowned economist Professor Wahiuddin Mahmud.

Currently, the national statistical organisation is using the 17 years old base year of 1995-96 to measure the GDP.

Recently, finance minister AMA Muhith expressed his doubt over the accuracy of the data being provided by the BBS as it is using very old base years for calculating different macro economic indicators.

Sources at the BBS said the technical committee initially recommended 2005-06 as base year as it was stable in terms of growth and inflation.

But many want 2010-11 as new base year which is also a normal year in the context of economic considerations.

The year to be under consideration under base year needs to be a normal in terms of growth and inflation, else future estimates will have bias built in.

In Bangladesh, the GDP base year, generally, is revised every 10 years. In India, it is revised every five years to improve data accuracy. The change in the base year of the GDP is considered to be very important, as new products and services will be reviewed in it.

BBS officials said the next GDP measurement for the year 2012-13 will be used under the new base year.

"We'll use the base year in March next year when we will prepare provisional figures of the real GDP of the current fiscal year (2012-13)," said Mondol of the BBS.

Economists said this is the right step as the GDP is being measured by very old base year and that raises questions on whether it is realistic or not.

Khandker Golam Moazzem, senior research fellow of the country's oldest think tank -- Centre for Policy Dialogue (CPD) -- said: "This is a step in the right direction despite it is too late." The closer the base year to the current year, the better the results, he added.

Moazzem said the change was necessary as data on services and some components in industry was outdated.

"The weight on ready-made garment was very low, it should be revised in the new base year," he added.