South Africa plans to reduce the total number of products and services in the national consumer price index (CPI) basket by more than 65%, and to include several new products to make the basket more representative of the majority of South Africans.

Statistics South Africa (Stats SA) said on Wednesday that it planned to cut the number of products and services in the CPI – an estimate the level of prices of goods and services bought for consumption purposes by households some – from 1 124 to 386.

About 389 products would disappear from the CPI basket because of methodological changes, while some 349 products would disappear because they did not meet the criteria anymore.

“The total of 386 is well within the range of products appearing in the CPIs of other countries around the world,” the statistics body said.

A Johannesburg-based economist commented that the proposed changes to the CPI basket seemed to be a “housekeeping exercise” to focus Stats SA’s resources on producing a more credible and reliable inflation index.

“StatsSa says they are committed to continue counting about 100 000 price records a month, but instead of focusing on about 1 200 products, they will survey more price information on a focused basket of about 400 products.”

But it was “a little concerning” that the price data on a wide range of products would no longer be recorded, the economist warned.

“In a developing country, like South Africa, Stats SA is the only effective repository of such information, yet one understands that Stats SA wants to streamline the process to improve CPI.”

The changes to the CPI basket are being proposed at the same time as plans to introduce a new survey methodology involving the site inspection of prices. This would replace the historical method of faxed communication, the economist said.

For the first time ever, minibus taxis, which accounted for over 60% of the country’s public transport, would be included in the CPI.

Stats SA said that the collection of these prices was now possible, as a result of the establishment of a national team of price collectors for CPI.

Funeral costs and funeral insurance had been included in the basket, because expenditure on these items had increased, the organisation stated.

Stats SA also proposed to create a distinct category for restaurants, take aways and hotels in the new CPI classification, and to publish their price change explicitly.

Internet service provider fees and laptops would be included, while DVD and CD players would replace VHS and audiotapes and players in the basket.

Stats SA would add tickets to sporting events to the entertainment basket, and, should the National Lottery be operational by January 1, 2008, it would also be included.

The organisation, which released the discussion document on Wednesday for public comment on Wednesday, said that the introduction of these products and services in a response to technology changes, and to make the basket more representative of the experiences of the majority of South Africans.

It said that the proposed changes would see dying technology, such as VHS and audiotapes, be replaced by those technologies that had established themselves as the standard, such as CDs and DVDs.

Stats SA explained that it had to use the total expenditure on an item and the number of households that bought the product as criteria to select products and services for the CPI basket.

“The combination of these two approaches serves to exclude any luxury items that may record high expenditure because they are expensive, bought exclusively by a small minority of households.”

Stats SA had also, for the first time, derived a basket for each province by applying a selection criteria on a province-by-province basis, rather than for the country as a whole.

This, the organisation believed, would make the CPI more responsive to the different purchasing behaviour of consumers in different provinces.

Some 292 products, of the 386 in the proposed CPI basket, would appear in all nine provinces.

Early next year, Stats SA would start collecting the prices of those products that were not part of the current basket, it said.

Until January 2009, the body would publish the CPI on the basis of the current basket of 1 124 products.