Sources and Methods: Labour Statistics
Volume 1: Consumer Price Indices

Peru (Lima)

Official title

Indice de precios al consumidor (Consumer Price Index).

Scope

The index is calculated monthly and covers urban households whose head is a wage or salary earner with an average income. Households with a high or very low per capita income are excluded, as are one-person households.

Official base

1979 = 100.

Source of weights

Items were selected and weights determined on the basis of the results of a household expenditure survey carried out during 12 months between September 1977 and August 1978 and covering 1,985 households in the Lima metropolitan area.

The items were selected using the following criteria: relative importance within the sub-group, representative of price movements of similar items and continuously available. The value of expenditure on items not included in the basket was added to that of the selected items either: (a) directly, by assigning it to another item with similar characteristics, which was considered to be a substitute; or (b) indirectly, by distributing the cost proportionately among the other items in the sub-group.

Weights and composition

Major groups Number of items Weights Approximate number of price quotations
Food and tobacco 7538.0923386
Clothing and footwear 117.331323
Rent, fuel, electricity 815.571424
Furniture, household equipment, cleaning materials 366.981589
Personal and medical care 82.64417
Transport and communication 109.83272
Education and recreation 127.40592
Other goods and services 1312.16997
Total 173100.0030000

Household consumption expenditure

Household consumption is defined as that part of expenditure on goods and services which is designed to satisfy the needs of the family, excluding the acquisition of housing and land, and all disbursements which may generate income for households. Home-produced goods and services consumed by the household are valued at market prices and included in household consumption. Thus, for example, household expenditure includes the imputed rent of owner-occupied housing. Account is also taken of all payments that do not involve double counting, for example the cost of car insurance provided the repair costs of insured vehicles are not included.

Method of data collection

The results of a special National Institute for Statistics (INE) survey were used to select the sample of outlets, on the basis of the number of points of sale and the number of street vendors in the area. The sample comprised 33 markets and four supermarkets. Commercial and service establishments were selected from commercial streets or zones in each district on the basis of their readiness to collaborate in the survey and the range of products available. Account was also taken of the large chains of supermarkets. The prices used to calculate the index are those paid by housewives in markets or by most consumers in establishments. The prices are recorded in supermarkets, retail outlets and service establishments. Items with prices that vary considerably, such as fresh produce (vegetables, tubers, fruits, fish, greens) and those whose prices vary only very slightly but which are sold in large public markets (rice, sugar, edible oils and fats, etc.) are priced each week. Items with less varying prices, such as cereals, clothing, furniture, etc, are priced each month. Rents, property prices and municipal taxes are recorded twice a year. Public service charges are recorded periodically. Some prices are obtained by direct purchase in markets.

Housing

Data on house rents are obtained from a fixed sample of households covered by the survey.

Specification of varieties

The selection of a given variety under a heading depends on its importance within the category, the ease with which it can be defined and priced and its continued availability over time.

The articles selected in the household survey do not always have well defined characteristics, as regards trade marks, size, etc. In order to compile initial samples for the purpose of observation, the investigators visited the establishments in the sample, and noted in detail the characteristics of the items selected: name, trade mark, model, size or weight, etc. Where possible, the dealer was asked which brand of the particular variety he sold most of. The sample was then centrally controlled to ensure that the prices recorded correspond exactly to those appearing in the sample.

Substitution, quality change, etc.

For various reasons, (e.g. the season, absence of traders, discontinuity of items) it is not always possible to record prices for all items. The National Institute for Statistics solves this problem as follows: when a variety is homogeneous, an average price is used, calculated on the basis of the prices collected for other similar items during the period; when a variety is heterogeneous, the latest available price is maintained if it is certain that the item will reappear in the near future; if the item does not reappear after three months, it is replaced.

Seasonal items

Not available.

Computation

The index is computed according to the Laspeyres formula as a weighted arithmetic average with fixed base, using weights corresponding to September 1977-August 1978.

Price relatives of the current and previous periods are used to compute item indices. Relatives of average prices are calculated for homogeneous varieties, and averages of price relatives are used for heterogeneous varieties. Simple arithmetic averages are calculated in both cases.

Other information

A new series is now computed (base 1990 = 100), but the relevant methodological information was not available in the ILO at the time the present volume was published.

Organisation and publication

Instituto Nacional de Estadística: Indice de Precios al Consumidor de Lima Metropolitana (Lima).

Idem: Indice de Precios al Consumidor de Lima Metropolitana, Metodología, dic. 1980 (Lima).