The CPI, also known as the Consumer Price Index, is designed to indicate the overall fluctuations in retail prices for all Malaysian households. Nonetheless, it should not be presumed that it precisely reflects the unique circumstances of each household.
The Laspeyres formula is utilized for determining the index, which is based on locally consumed items and represents the average spending habits of Malaysians. Therefore, the CPI functions as a general indicator of price fluctuations for goods and services paid by households, making it the most commonly used measure of inflation for consumption expenses. The CPI measures changes in the overall price level of a fixed basket of goods and services typically consumed by an average Malaysian household compared to a base period. To avoid impracticality and redundancy, not all consumer items are included; instead, representative
...items or samples are carefully selected to reflect price changes across a wider range of goods. The assigned weight for each item in the CPI is determined by its estimated expenditure derived from the Household Expenditure Survey.
This survey gathers information on the average spending for specific items, such as rice, fresh meat, fresh fruits, bus fare, and others, bought by the chosen households during the survey period. The choice of items to be included in the fixed basket of goods and services is primarily based on their importance in overall household spending, their representativeness as price indicators for similar items in the same category, and their ease of specifying quantity, specification, and brand. Items with low weight or no meaningful unit of measurement are not selected. Instead, their weights are distributed among similar selected items based on their price
movements. Once the basket of items is established, it remains unchanged until the next major revision of weights.
The list at the detailed brand level is continually updated in practice, though the expenditure items remain the same. Certain brands may no longer be available or withdrawn from the market and are replaced with new brands. Additionally, changes may occur due to variations in models, sizes, and packaging. The Consumer Price Index publication is typically released on the 15th of the month following the reference month, once the data is presented to the Malaysian ministerial cabinet. It includes indices for both the national level and the regions of peninsular Malaysia.
Sabah and Sarawak. (510 words)
Reference;
- Department of Statistics Malaysia
- Ismail bin Yusoff; The Consumer Price Index; Conference in Thailand
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