Reinventing SPI

Published: January 11, 2019
The writer is a senior economist. 
He can be contacted at

The writer is a senior economist. He can be contacted at

Information Minister Fawad Chaudhry briefed the press after a cabinet meeting held on the second day of the new year. Among other things, he broke the news that the government had finally decided to do something about the prices of essential items. After regretting that the good news of falling prices of some fruits and vegetables had not caught the attention of the journalists, he revealed that the prime minister had directed the Statistics Division to monitor the prices of items of daily use regularly and brief the cabinet on a weekly basis. According to him, the Statistics Division would monitor and collect data on prices of items of daily use in 76 markets and 40 cities and then submit its report to the federal cabinet each week. Unfortunately for him, this important step failed to become breaking news. And rightly so.

The Statistics Division is no more than a post box. It only lords over the Pakistan Bureau of Statistics (PBS), an organisation whose autonomy should have been the first priority of a government committed to transparency and accountability. The Statistics Division used to be a part of the Ministry of Finance, a clear conflict of interest. Then prime minister Shahid Khaqan Abbasi took the first step of freeing it from the tutelage of the Ministry of Finance. The next and the more important step is to make the PBS truly independent. At present, it is a lame duck, without chief statistician and members of economic statistics and national accounts, besides a number of other critical staff. This lame duck has been asked to implement the decision of the cabinet.

For the information of the information minister, the PBS already produces the Sensitive Price Indicator (SPI). It has been doing it for decades and publishes the results every Thursday. Price data is collected from 53 markets in 17 major cities. The number of items of common use covered is 53, a substantial number. Most important, the SPI presentation was always the first item of the agenda for the ECC of the Cabinet, followed by an analytical summary on prices by the Planning Commission. This writer presented many of these summaries during his service in the Planning Commission. It provided an opportunity to the government to take suitable and timely action to soften the impact of any significant rise in prices. With the change of government last August, the practice seems to have been discontinued by default.

Perhaps the information minister was claiming the launch of a major new initiative by extending the coverage of cities from 17 to as high as 40 and the number of markets to 76. But wait a minute. An index with this coverage also exists already. It is called the Consumer Price Index (CPI). It covers 487 goods and services. The problem is that it is a monthly index and may be problematic to present it every week, as per the requirement of the cabinet indicated by the information minister. The SPI is a subset of the CPI. It is supposed to be a quickly accessible snapshot of the price situation. The real problem is that, despite the availability of information, what is it that the federal government can do to provide relief. Policies of liberalisation, deregulation and privatisation have not left much leverage with it. It can change taxes, but fiscal policy cannot be changed while reviewing weekly prices. Administrative measures to restrain price rise at district level lie fully in the domain of the provinces. The Utility Stores Corporation allows a means to subsidise selected items, but Mr Razzak Dawood wants it closed down.

Published in The Express Tribune, January 11th, 2019.

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