The general increase in prices of goods and services which are basic needs for the community or the decline in purchasing power of the country's currency.
Consumer Price Index (CPI):
An index, that measures the average change in prices between times, of a package of goods and services consumed by the population/households in a certain base period.
Price statistics, particularly consumer price statistics are collected to calculate Consumer Price Index (CPI). The CPI is calculated to measure the price movement of a commodity package consisting of goods and services that people buy for day-to-day living. The change of CPI over time indicates the rate of inflation or deflation of goods and services.
The Indonesian CPI is calculated by using modified Laspeyres formula. Arithmetic mean is used for calculating the average (mean) of commodity prices, but for some of them, such as rice, cooking oil, gasoline, etc, geometric mean is used.
Since January 2014, the CPI has been calculated by using the base year of 2012 (2012 = 100), covering 82 cities which consists of 33 provincial capitals and 49 big cities all over Indonesia. Previously, CPI was calculated using the base year of 2007 (2007=100) and covering 66 cities only.
In compiling CPI, data of consumer prices are obtained from 82 cities, covering 225 â€“ 462 goods and services grouped into seven expenditure groups namely: foodstuff; prepared food, beverages, cigarettes, and tobacco; housing, water, electricity, gas, and fuel; clothing; health; education, recreation and sports; and also transport, communication and financial services.
Each group consists of several sub groups, and each sub group consists of several commodities. Furthermore, all of the commodities have several qualities or specifications.
Some representative traditional and modern markets, and also outlets in each city are selected to represent the prices of goods and services in the corresponding city. Price data of each commodity is obtained through direct interview from 3 or 4 retailers visited by enumerator.
Purposive sampling is used in the selection process of the cities, markets, outlets, respondents, commodities and the qualities in the CPI calculation (the most widely consumed).
The frequencies of price data collection are different from one commodity to another depending on the characteristic of each commodities, as follows:
Price data collection of rice is conducted daily in Jakarta and weekly in the other cities.
For several commodities known as basic necessities, price data is collected weekly on Monday and Tuesday.
For some food commodities, price data is collected every two weeks on Wednesday and Thursday of the first and the third week of the month.
For other food commodities, prepared food, drinks, cigarettes and tobacco, price data is collected monthly for 3 days, from Tuesday â€“ which is the closest to day 15 of the month â€“ until Thursday
Price data of durable goods is collected monthly on day 5 to day 15 of the month.
Price data of services is collected monthly on day 1 to day 10 of the month.
House rent data is collected monthly on day 1 to day 10 of the month.
Housemaid and baby sitter salaries are observed monthly on day 1 to day 10 of the month.
Data related to the education expenses are collected monthly on day 1 to day 10 of the month.