Search

 

Cablegate: Iraq's New-and-Improved Consumer Price Index

VZCZCXRO1460
RR RUEHBC RUEHDA RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHGB #3173/01 3431446
ZNR UUUUU ZZH
R 091446Z DEC 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 5670
INFO RUCNRAQ/IRAQ COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 BAGHDAD 003173

SIPDIS

STATE FOR NEA/I/ECON

E.O.12958: N/A
TAGS: ECON EFIN EAID PGOV PREL IZ
SUBJECT: IRAQ'S NEW-AND-IMPROVED CONSUMER PRICE INDEX

1. (U) Iraq's Central Office for Statistics and Information
Technology (COSIT) has unveiled new consumer price index (CPI)
weights. The weights are based upon data collected in the 2007
World Bank-sponsored Household Socio-economic Survey, which included
a comprehensive study of household spending habits. The new
methodology will also calculate geographic differences in prices at
the regional, provincial, and city levels.

2. (U) The 2007 CPI basket items and their relative weights vary
considerably from those of the current CPI basket, which has been in
use since 1993. The 1993 price survey was conducted under Saddam's
regime shortly after the conclusion of the 1991 Gulf War and was
reported to have taken only three months. Fuel was subsidized and
rents were controlled. Cell phone use was minimal, and land line
penetration was less than two percent. The 1993 CPI also does not
include prices from the Kurdistan Region.

NEW BASKET REFLECTS CHANGING IRAQI EXPENDITURES

ITEM PERCENTAGE WEIGHT IN BASKET
1993 (%) 2007 (%)

1. Food and beverages
(non-alcoholic) 62.87 30.06

2. Alcohol and tobacco 3.49 0.72

3. Clothing and shoes 9.65 7.33

4. Housing, water,
electricity and fuel 13.69 31.31

(Rent alone 11.59 N/A)

5. Housing equipment
and maintenance 3.07 6.38

6. Health 1.48 2.31

7. Transportation 4.87 11.09

8. Communications N/A 2.93


9. Recreation and Culture 0.03 1.62

10. Education 0.08 0.99

11. Restaurants 0.30 1.40

12. Miscellaneous 0.47 3.88

TOTAL 100% 100%

3. (U) The above data reflects changing Iraqi households'
consumption patterns from 1993 to 2007. The new weight for food and
non-alcoholic beverages (30.1 percent) is less than half its
previous level (62.9 percent), probably because other categories
have become relatively more expensive. Alcohol and tobacco
consumption has dropped significantly as a percentage of
expenditures as well. Fuel and electricity expenses have now been
combined with rent, and their total weight has more than doubled
from 13.7 to 31.3 percent. [NOTE: The UN estimates Iraq faces a
serious housing shortage of about 1.5 million units. Tracking rents
may prove more difficult as they will be combined with fuel and
electricity, which have been historically volatile. END NOTE.]

4. (U) Families are also paying more for services provided by the
social system as household healthcare spending is up by 60 percent
while education spending is up more than twelve times its previous
level. Communication expenditures were negligible in 1993, but make
up almost three percent of a family's budget now, primarily due to
the advent of cell phones. Recreation and restaurant spending have
both increased several times over their 1993 levels, but their
combined total accounts for about only three percent of a typical
household's budget.

COMMENT
-------

5. (U) October 2009 year-on-year core inflation of 5.5 percent and
year-on-year headline inflation of -6.4 percent were still
calculated using the 1993 price index. COSIT has not yet announced
how or when it will transition from the old weights to the new ones
and whether previous data will be re-indexed. Nevertheless, the CPI
Qand whether previous data will be re-indexed. Nevertheless, the CPI
basket overhaul has been long overdue, and should be recalculated
every three years. This new data will give public and private
decision makers better perspective on how economic trends affect the
average Iraqi family, and its implementation and publication will be

BAGHDAD 00003173 002 OF 002


a welcome improvement.

HILL

© Scoop Media

 
 
 
World Headlines

 

UN: India’s New COVID-19 Wave Is Spreading Like ‘Wildfire’, Warns UN Children’s Fund

7 May 2021 A new wave of COVID-19 infections is spreading like “wildfire” across India, leaving many youngsters destitute, the UN Children’s Fund UNICEF said on Friday. In the last 24 hours, India registered 3,915 coronavirus deaths and 414,188 ... More>>

UN: Decades Of Health Gains At Risk In Brazil Due To COVID-19

Although COVID-19 cases are declining in Brazil, the pandemic is putting decades of public health gains there at risk, the head of the World Health Organization ( WHO ) said on Friday. With global attention and support focused this week ... More>>

UN Report: Myanmar Approaching Point Of Economic Collapse

The turmoil following the military coup in Myanmar, coupled with the impact of COVID-19 could result in up to 25 million people – nearly half of the country’s population, living in poverty by early next year, a United Nations report said on Friday. That ... More>>


Focus On: UN SDGs

Study: Cut Methane Emissions To Avert Global Temperature Rise

6 May 2021 Methane emissions caused by human activity can be reduced by up to 45 per cent this decade, thus helping to keep global temperature rise to 1.5 degrees Celsius in line with the Paris Agreement on climate change, according to a UN-backed ... More>>

UN: Learning From COVID-19, Forum To Highlight Critical Role Of Science, Technology And Innovation In Global Challenges

New York, 4 May —To build on the bold innovations in science, technology and innovations that produced life-saving solutions during the COVID-19 pandemic, the UN will bring together experts to highlight measures that can broaden the development and deployment ... More>>

What COVID-19 Has Taught Us: “Healthcare Can No Longer Exist Without Technology”

A grandmother in a village in the Gambia should have the same quality of life and access to healthcare they deserve as in New York or London. Photo: InnovaRx Global Health Start-up Works To Bridge Healthcare Gap In The Gambia By: Pavithra Rao As ... More>>