From the be­gin­ning of next year, two changes made to T&T's Re­tail Price In­dex (RPI) should lead to down­ward re­vi­sions in this mea­sure­ment of in­fla­tion, which is pub­lished by the Cen­tral Sta­tis­ti­cal Of­fice (CSO) on a month­ly ba­sis.The two changes will be a re­vi­sion of the mar­ket bas­ket of con­sumer items that forms the ba­sis of the RPI and a change in the method­ol­o­gy used by the CSO for cal­cu­lat­ing the RPI, which will re­duce the im­pact of food price volatil­i­ty on the In­dex, ac­cord­ing to a state­ment from the CSO:

"The new mar­ket bas­ket of con­sumer items has now been fi­nal­ized and will form the ba­sis of a re­vised method­ol­o­gy based on ex­ten­sive con­sul­ta­tions with key in­sti­tu­tions with ex­per­tise and knowl­edge of the most en­light­ened, mod­ern prac­tices. "The In­dex of Re­tail Prices (RPI) is one of the most im­por­tant eco­nom­ic in­di­ca­tors dis­sem­i­nat­ed by the CSO. This in­dex, which forms the ba­sis for the com­pu­ta­tion of head­line and core in­fla­tion, is an im­por­tant in­put in­to cost of liv­ing as­sess­ments and wage set­tle­ments in the do­mes­tic econ­o­my. "It is stan­dard prac­tice by the CSO to un­der­take pe­ri­od­ic re­vi­sions of the RPI, to up­date the mar­ket bas­ket of items to more ac­cu­rate­ly re­flect house­hold pur­chas­ing pat­terns. Over the years, in­dices have been pub­lished for base years Sept 1960=100; Sept 1975=100; Sept 1982=100; Sept 1993=100; and Jan 2003=100. The re­vised In­dex of Re­tail Prices will re­flect the base year Sep­tem­ber 2011=100.

"The re­vi­sion of the RPI will al­so give the CSO the op­por­tu­ni­ty to in­tro­duce im­prove­ments in the meth­ods and pro­ce­dures for cal­cu­lat­ing the In­dex to meet the lat­est In­ter­na­tion­al stan­dards. These stan­dards are con­tained in the Con­sumer Price In­dex Man­u­al pub­lished joint­ly un­der the aus­pices of the In­ter-Sec­re­tari­at Work­ing Group on Price Sta­tis­tics (IWG­PS), which is made up of six In­ter­na­tion­al Or­gan­i­sa­tions in­clud­ing the In­ter­na­tion­al Labour Of­fice (ILO) and the In­ter­na­tion­al Mon­e­tary Fund (IMF). "To take ac­count of changes in the spend­ing pat­terns of house­holds, the CSO con­duct­ed, in 2008/2009, an ex­ten­sive House­hold Bud­get Sur­vey, which mea­sures the pur­chase of goods and ser­vices by house­holds through­out Trinidad and To­ba­go. The re­sults of the sur­vey now form the ba­sis for the choice of the in­di­ca­tor items to be mon­i­tored and for up­dat­ing the weights of the var­i­ous sec­tions of the In­dex (such as food and non-al­co­holic bev­er­ages, hous­ing, wa­ter, elec­tric­i­ty, and fu­els, trans­porta­tion and health). The re­based in­dex will al­so in­clude some new tech­no­log­i­cal goods and ser­vices such as mo­bile com­mu­ni­ca­tion de­vices, ipods, ipads and mpg play­ers, as well as en­er­gy con­ser­va­tion prod­ucts.

"In prepar­ing for this re­bas­ing ex­er­cise, the CSO has held sev­er­al dis­cus­sions with the tech­ni­cal staff at the Cen­tral Bank of Trinidad and To­ba­go, the In­ter­na­tion­al Mon­e­tary Fund and the Re­gion­al Sta­tis­tics Pro­gramme of the CARI­COM Sec­re­tari­at. It has al­so un­der­tak­en with tech­ni­cal sup­port from the Caribbean Tech­ni­cal As­sis­tance Cen­tre (CAR­TAC), a full-scale re­view and au­dit of its cur­rent method­olo­gies and prac­tices for com­pil­ing con­sumer prices in Trinidad and To­ba­go. "It has been gen­er­al­ly rec­og­nized that the CAR­LI method, which is based on an arith­metic av­er­age of price ra­tios, and which is em­ployed in some sta­tis­ti­cal of­fices, in­clud­ing the CSO, in­tro­duces a sig­nif­i­cant up­ward bias in the rate of in­fla­tion. This prob­lem is even more pro­nounced when the sub-in­dices are chained and when there is sub­stan­tial vari­a­tion in prices as hap­pens with food in the Trinidad and To­ba­go con­text.