Survey on household spending patterns

PUBLISHED : Monday, 28 May, 2001, 12:00am
UPDATED : Monday, 28 May, 2001, 12:00am

The consumer price index (CPI) is an important economic indicator that measures changes in the price of goods and services generally bought by households.

Many organisations often refer to changes in the CPI to make adjustments to wages, salaries and allowances for staff. They also revise charges on this basis too.

The CPI is also a factor in economic analysis.

In compiling the CPI, two kinds of information are required.

First, we have to establish a basket of goods and services commonly purchased by households - a list of items and a set of expenditure weights reflecting the relative importance of individual items on the list.

Second, we need to know the price movements of different items and services on the list.

The former type of information is derived from the results of a household expenditure survey (HES), conducted at five-yearly intervals.

The latest round was conducted in 1999/2000. The practice of conducting an HES to update the expenditure weights of the CPI every five years conforms to international standards.

The second type of information is compiled based on the price data for a wide range of consumer goods and services obtained from a continuous pricing survey.

Why is the set of expenditure weights essential to the compilation of the CPI?

As households spend more on some items and less on the others, similar price movements in different items may have different effects on the overall price change. So, a weighting system, representing the relative importance of items bought by households in terms of expenditure, is required for compiling the CPI.

The weight of each item rep resents the item's share in the total expenditure of households.

The 1999/2000 HES was conducted from October 1999 to September 2000.

It covered an entire year in order that seasonal variations in household expenditure patterns were fully taken into account. Infrequent purchases made by households in the year were also recorded.

According to the results of the last HES, the shares of household expenditure on food; clothing and footwear; alcoholic drinks and tobacco; and miscellaneous goods, have dropped over the past five years.

In the meantime, the expenditure weight for housing had risen. Besides, the transport, du rable goods, electricity, gas and water and miscellaneous services sections have also recorded increases in their expenditure weights.

In particular, there has been a substantial growth in the expenditure weights for goods and services related to information technology and telecommunication, such as computers and mobile phone products and services. Such products and services were relatively expensive a few years ago.

However, with downward adjustment of prices in recent years, they have become very popular these days.

The changes in expenditure pattern of households described above may not tally with some people's experience.

This is not because the expenditure weights derived from the HES represent the collective experience of all households.

With the results of the last HES, the different CPI series have been readjusted and the respective expenditure patterns have also been updated.

Apart from updating the weights of different goods and services in the CPI basket, new items are added and obsolete ones deleted based on their significance and popularity.

Some goods and services added to the basket were sushi, home insurance, massage chair, notebook computer, digital camera and Internet services.

Items such as kerosene stove, typewriter and rental of audio- visual equipment were removed as the expenditures on the items became insignificant.

The 1994/95 CPI series will continue to be published with the new 1999/2000 CPI series until the reference month of December this year

For more information on this series of articles, write to the General Statistics Branch (2) of the Census and Statistics Department, 21/F, Wanchai Tower, 12 Harbour Road, Wan Chai, Hong Kong, or call 2582-4004. Address of the department's homepage is