Officials trained on Compilation of Producer Price Index

The Producer Price Index (PPI) is a direct indicator of the purchasing power of money in various types of transactions and other flows involving goods and services. The index is also used to deflate nominal measures of goods and services produced, consumed, and traded to provide measures of volumes. Consequently, the indices are important tools in the design and development of the monetary and fiscal policy of the government. They are also of great utility in informing private sector’s decision making process. However, there are concerns over the accuracy and availability of PPI in the MEFMI region. Most MEFMI member countries are relying on Consumer Price Index (CPI) as a deflator, not only for nominal value of goods and services consumed but also on those produced, exported and imported, which raises methodological concerns. MEFMI conducted a virtual seminar on the compilation of the PPI from 27 – 30 September 2021 in an effort to address some of these concerns.

This seminar aimed to provide capacity on the compilation of PPI according to the methodology recommended by the latest PPI Manual, 2004. Participants were shown how to use the averages that emerge for fixed-base indices which are the geometric mean of the Laspeyres and Paasche indices (Fisher ideal index) or the geometric average of the quantity weights in both periods (Walsh index). It is envisaged that, in the medium term, participants will apply the skills acquired to improve procedures for the collection or processing of the price data, methods of aggregation and other important factors governing the methodology.

The seminar was attended by 67 junior to middle level officials from 13 MEFMI member countries, namely, Angola, Botswana, Eswatini, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe. These participants were mentored by a team of resource persons comprising Dr. Katherine Pegler (independent consultant); Mr. Senei Molapo (MEFMI Programme Manager) and Mr. Fernando Cambundo (independent consultant).

Going forward, MEFMI will continue to engage specific country officials to explore potential in-country missions to address data gaps, which were identified during the seminar and build capacity within client institutions on PPI.

Source: Mefmi