M Micro Stat

Surname
DOVOROKWA
Forenames
DANIEL
Registration no.
R0825744R
Programme
BSc (Hons) Mathematics
1
DANIEL DOVOROKWA WORK RELATED LEARNING REPORT
CONTENTS
PAGE
Acknowledgements
4
Aims
4
Organizations History
1. ORGANIZATIONAL CULTURE/STRUCTURE
1.1 Organizational Culture
1.2 Organizational Structure
2. EXPECTATIONS
3. NATURE OF INDUSTRY/INDUSTRY DEVELOPMENTS
10
3.1 National Statistics
10
3.2 Organizations Divisions
10
3.2.1 Social and Population Statistics
10
3.2.2 Economic Statistics
11
4. PRODUCT/SERVICE MARKETS
11
Prices Section Publications
12
Consumer Price Index (CPI)
12
Civil Engineering Price Index (CEPI)
12
Building Materials Price Index (BMPI)
12
Poverty Datum Lines (PDL)
13
5. COMPANY SOCIETY CONNECTION
13
6. PERSONAL DEVELOPMENT
14
6.1 Strengths
14
2
6.2 Weaknesses
15
7. CONFLICT BETWEEN PERSONAL/ORGANIZATIONS OBJECTIVES
17
8. KEY SKILLS DEVELOPMENT
18
8.1 Skills Developed
18
8.2 Work Done
18
8.2.1 Calculation of the CPI
19
8.2.2 Calculation of other indices
26
8.2.3 Other Work
27
8.3 Workshops, Seminars and Meetings attended
28
9. OVERVIEW
29
10. RE-ENTRY
35
10.1 Re-entry
35
10.2 Recommendations
36
APPENDIX
Abstract
This report is prepared in partialfulfilment of the requirements of the
Bachelor of Science Honours Degree in Mathematics, Work Related
Learning experience that spans for duration of one year. I obtained this
experience at the Zimbabwe Statistical Agency (ZIMSTAT), formerly
Central Statistical Office (CSO) Harare. Information contained in this
reportwasacquiredthroughdaytodayactivitiesandCSOpublications.
The report seeks to portray a conceptual framework of my experiences
3
duringtheeraofmyindustrialattachmentatZIMSTAT.Thereportwill
highlighttheorganizationalbackgroundof ZIMSTAT,itsoperations,the
resulting products and services it offers, giving an overview of how the
theory I acquired at the university managed to simplify the duties I
performedduringmyperiodinthePricesStatisticssection..
ACKNOWLEDGEMENTS
IwouldliketoprofoundlyexpressmygratitudetotheZIMSTATSTAFF
andmanagementfortheirsupportduringmyperiodofplacement.Special
thanksgoestomysupervisorsMRChikadayaandMrDambawhowere
inspiringmeduringthewholeperiodofmyworkrelatedlearning.Iwould
alsowanttogivethankstoMrsTakuva,MrsKafansiyanji,MissTombori
andMissChirochierwafortheirsupportduringmyperiodofplacement.I
wouldalsoliketothanktheMidlandsstateUniversityparticularlythe
departmentofMathematicsfortheiracademicsupportwhichleadtothe
successfulcompilationofthisreport.Iwouldliketothankmylecturersfor
thecarrierguidancetheygavetome.
AIMS
InthisreportIamaimingathighlightingmyexperiencesduringthework
relatedlearningperiod.HowIfailedormanagedtocarryoutmytasksand
4
howIpracticallyappliedMathematicstofulfilsomeofmyduties.This
reportalsoaimsatpartlyfulfillingtheBSc(Hons)Mathematicsdegreeas
required.
CHAPTER ONE (1)
ORGANIZATIONSHISTORY
The British South Africa Company (BSAC) established a Statistical Department in
1894 under the control of the first statistician Hubert Hervey. Hubert Hervey was
killed in the Matopo and the Civil Commissioner at Harare (the then Salisbury)
took over his duties. The first Census was taken in Bulawayo (1895) for which
the mining commissioner gave estimated figures of those in the mining industry
and on the other hand the civil commissioner supplied the urban figures. In
addition, two years down the line another census was conducted in Salisbury for
which data was collected through the Acting Magistrate.
By 1924 various offices were engaged quite independently or liberally in the
collection of
Statistics. Vital statistics were collected by the Public Health Department, criminal
statistics by the Law Department, and livestock statistics by the Veterinary
Department, postal statistics by the Post-master General and the list goes on.
1.2 CENTRAL STATISTICAL OFFICE
CSO was established in 1927 and is governed by the Census and Statistics Act,
Chapter 10:05 (formerly chapter 79). The Departments major functions include
conducting censuses as well as the collection, compilation, analysis and
dissemination of statistical information relating to the social and economic life in
Zimbabwe.
Operationally, the Department is divided into two subjects matter areas namely
the Economic Statistics and Population and Social Statistics divisions and these
are further subdivided into branches and sections. The substantive divisions,
5
branches and sections are supported by those sections providing common

statistical services such as Desktop Publishing and Printing, Computing and Inservice Statistical Training and the non-statistical common services of
Administration and Finance.
It was opinionated that efficiency and reliability would be improved if these
obligations were centralized in one department under a trained qualified
statistician. This recommendation was well supported and monetary provision or
financial input was put in place for a statistical Bureau for the year ended 31
March 1928. In 1929 the Statistical Bureau, which operated under the Ministry of
Home Affairs, consisted of a Government Statistician, Investigators, and
statistical clerks.1935 saw the Statistical Bureau shifted from the Ministry of
Home Affairs to the Ministry Commerce, Transport and Public Works. By then it
had two divisions namely, Administrative and Trade Statistics. In 1936 the Bureau
became part of the Ministry of Finance and Commerce.
By 1955, when the census and statistics bill was passed into an act, the Bureaus
responsibilities
were to:
Carry out any censuses required.
Collect, compile, analyze and abstract statistical information relating to the
commercial, industrial, agricultural, mining, social, economic and general
activities as well as to publishing such information
Collaborate with the government and all stakeholders of that time in the
collection, compilation, co-ordination, and analysis of statistical records of
administration.
Generally to organize a co-coordinated scheme of social and economic
statistics.
In 1960 the office was further placed under the of Ministry of Economic Affairs
and a year after it was given a new name and thats the one it still has, the
Central Statistical Office. In 1981 the office was transferred to being a
6
department within the Ministry of Economic Planning and Development and

continues to report to the same ministry although the ministry was later merged
with the Ministry of Finance in 1982.The Department is currently operating under
the Ministry of Economic Development and Planning, following the separation of
the Ministry of Finance and the Ministry of Economic Development which was
jointly operating as the Ministry of Finance and Economic Development up to
May 2005. Prior to joining the Ministry of Finance and Economic Development
was under the President and Cabinet Office.
Though the CSO tries to provide reliable statistical information, it is limited by a
number of constrains that is limited resources, lack of comprehensive and
sustainable training, inadequate modern technological resources for data
collection, processing and dissemination as well as low response rate.
1.3 DEVELOPMENTS
1.3.1 SEMI-AUTONOMOUS AGENCY
The Central Statistical Office is subjected to various challenges in the execution
of its duties as well as in the provision of reliable and relevant statistics that
adhere and meet the needs of the recipients of their services. The Department
finds itself caught in a vicious cycle where national statistics has been underappreciated, under-valued and under-invested. High staff-turnover, outdated
statistical legislation and low response rates constrained and hindered statistics
developmental activities and operations, furthermore, has resulted in production
of outdated statistical information unfit for use in policy processes.
It is against this background that CSO is working on the transformation to a
semi-autonomous agency and the creation of a National Statistical System
(NSS), careful decisions were made in order to best develop statistics most
efficiently and effectively; and reform was made across the whole National
Statistical System. So that the statistical body can be managed strategically,
making efficient use of the scarce resources to meet the needs of its users. This
transformation exercise will enable the organization to operate under the name
The Zimbabwe Bureau of Statistics (ZIMStats). Up to date everything has
7
been set up including the chairing and passing of the bill into an act by
parliament. In this regard the organisation was successfully transformed as a
semi-autonomous agency on the 12th
of May 2010 as ZIMBABWE NATIONAL STATICA L AGENCY (ZIMSTAT)
The suggested Vision for the new organization is;
World class provider of statistical information and services;
And its Mission is;
The provision of timely, accurate, reliable and relevant statistics, adhering to
international
Standards through a highly qualified and motivated professional staff using state
of the art
Technology in response to the demands of our clients.
1.3.2 ZIMSTAT STRATEGY
The strategy to achieve the above mission is through the carrying out of the
following functions:
Draw up an overall master plan for official statistics and keep it under
continuous review.
Establish statistical methodologies and standards and ensuring their use
by all producers of official statistics so as among other things to facilitate
the integration and comparison of the statistics produced both nationally
and internationally.
Co-ordinating statistical activities in the country so as to avoid duplication
of efforts in the production of statistics, to ensure optimal utilisation of the
available resources and to reduce the burden, on respondents, of
providing statistical data.
Collecting, compiling, analysing, and disseminating statistics and related
information.
Maintaining an inventory of all available official statistics in the country and
assisting users in obtaining international statistics.
Providing statistical services and professional assistance to official bodies
and the public at large.
8
Providing a contact point for international organisations and foreign

institutions in need of statistics on Zimbabwe.
1.3.3The core values of the new agency are:

Confidentiality
Integrity
Professional independence
Accountability
International standards
Dedication
Adaptive to change
Courteous
1.4 MAIN ROLES OF THE ZIMSTAT
To provide statistics to the government, business community and general

public as well as international organizations for use in planning and
decision making
To co-ordinate statistical activities so as to produce statistics that are

consistent
ZIMSTATS is aware that both parties of the Zimbabwean economy are gearing
up for an economic recovery path, hence this inevitably generate increasing
demand for better statistical information. Major decisions are being made
concerning economic and organizational change, and decision makers require
accurate, timely and relevant statistics. The demand from public and private
users of data on economic status, demographic information, etc. is increasing.
9
The increasing importance of private sector activities has made it imperative to

strengthen the collection of statistics in this sector of the economy.
1. ORGANIZATIONAL CULTURE/STRUCTURE
1.1 ORGANIZATIONAL CULTURE
Organizational culture can be described as the dominant values espoused by

an organization, the philosophy that guides an organizations policy toward
employees and customers, the basic assumptions and beliefs that are shared
by members of an organization or informally as, the way things are done
around here. Taking a closer look at the wide array of the above definitions
they uncover a central theme of organizational culture referring to a system
of shared meaning.
Culture implies the existence of certain dimensions or characteristics that are
closely associated and interdependent, and has distinct dimensions that can
be measured. Our organization has a culture characterized by:
Direction, which is the degree to which the organization creates clear
objectives and performance expectations.
10
Integration, which is the degree to which units within the organization

are encouraged to operate in a coordinated manner.
Management Contact, which is the degree to which managers provide
clear communication, assistance and support to their subordinates.
Identity, which is the degree to which members identify with the
organization as a whole rather than with their particular work group or
field of professional expertise.
2.1.1 VISION AND MISSION STATEMENTS
Below is the vision and mission of the organization.
THE VISION
To become a world-class provider of official statistical information and services
THE MISSION
Provision of timely, accurate, reliable and relevant statistics, for evidence-based
policy and decision making , using qualified , competent , motivated and
professional staff and state of the art technology in response to the demands of
our clients.
Policy formulation;
Planning and Decision making;
Evaluation and Research;
Transparency and good governance;
VALUES
In caring out their responsibilities ,ZIMSTAT staff will be guided by the following
shared values;
User focus ; All actives of Zimstat shall aim at understanding and

meeting data needs and expectations of users.
11
Integrity and credibility; To create and maintain public trust in official

statistics by fully exeicising professional independence and by
proactively promoting best practises ,including transparency in data
production and transparency , in data production and dissemination

Quality consciousness; To develop and maintain a system wide quality
culture ,through innovation ,research and creativity to produce value
added products services ,and by developing frameworks for assessing
and enhancing the quality of such products and services
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ORGAN GRAM
DIRECTOR OF CENSUS AND STATISTICS
Private Secretary
Economic Statistics
Population and Social Statistics
Administration
Human Resources
(Deputy Director)
Registry and Finance
Income Analysis
Production Statistics
(Assistant Director)
(Deputy Director)
Household surveys
Social Statistics Branch

Finance
(Statisticians)
Cartography
(Clerks)
Mapping
(Provincial supervisors)
(Field enumerators)
National Accounts
(Statisticians)
Prices
Environment
Production/Industrial Statistics
Gender
Agriculture Statistics
Health
Foreign Trade Statistics
Employment
(Statisticians and Clerks)
Judicial and Social Welfare

Living conditions
(Statisticians)
IMT
(Clerks)
(Statisticians)
(Clerks)
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1.10 CHAIN OF COMMAND

At the very epitome of the organization lies the Director, then two deputy
directors, one from social and population and the other from economic division
followed by four Assistant Directors down to the base, as clearly depicted by the
organ gram . At a certain juncture we can speak of what is termed Vertical chain
of command, and apparently at another we are in a position to also talk of
Horizontal chain of command. Both strategies per say are by no doubt actively
implemented.
1.11 SUMMARY OF MAJOR DEPARTMENTS
There are two main Divisions each with two branches supported by several
sections. The two main divisions are:
a)
Economic Statistics Branch
The branch is responsible for the compilation of statistical information that relates
to economic activities (activities of the secondary, primary and tertiary industries)
going around the country and is under the control of a Deputy Director who
reports to the Director. The division is further split into two branches namely
Income Analysis and Production Statistics. Each branch is headed by an
Assistant Director who acts as an interface between the sections statisticians
and the Deputy Director responsible for the whole division.
b)
Population and Social Statistics
The main task of this division is compiling and analysis of statistical information
with regards to the social welfare of the population and carrying out any field
surveys and mapping for the whole Department. The division is further split into
Household Surveys and Cartography and Demography and Social Statistics. The
Division compiles statistics used by various organisations to determine the social
welfare of the different communities around the country.
14
1.12 Statistics and Surveys within the Zimbabwe National Statistical

Agency
1.12.1 Statistics within ZIMSTAT include:
-Agriculture Statistics
-Employment Statistics
-Education Statistics
- Immigration and Tourism Statistics
-Environment Statistics
-Prices Statistics
-Finance Statistics
-Trade Statistics
-Production Statistics
-National Accounts
-Social Statistics
-Gender Statistics
-Health and Vital Statistics
-Cartography
-Judiciary and Social Statistics
-Population and Housing Census Statistics
Social indicators can be accessed through ZIMDAT database.
1.12.2 Main Surveys within ZIMSTAT include:
-Consumer Price Survey
-International Comparison of Prices
-Agriculture and Livestock survey
-Business Tendency Survey
-Income consumption and expenditure survey
15
2. EXPECTATIONS
Before I joined the ZIMSTAT I had a slight idea of how the organization
operated. I knew that they mostly dealt with the statistics of the
country; they conducted censuses and also produced economic
indicators like the Consumer Price Index (CPI) and the Gross
Domestic Product (GDP).
I therefore expected that I would really understand the use of these indices
and how they are computed. As per my expectations I got to understand the
use and importance of these indices and many other like the Harmonised
Consumer Price index(HCPI), Civil Engineering Price Index and the
Building Materials Price Index.
I also expected all the formulae to be readily available such that one can just
apply it to the relevant data but it was not necessarily so. All the formulae
were on the computer and one had to feed the cleaned data and follow the
not so easy steps for the computer to compute the indices. To know the
formulae and how to manually calculate the indices using a sample of the
16
data, I had to read the relevant literature. The actual calculation of the
indices however cannot be done manually as the amount of data used is large
and manual calculation would require a longer period.
Just as much as I expected to get help from my supervisors on most

proceedings, my expectations were right. Also contrary to my expectations
of a large organization, I got to work with a lot of people whose attitude was
friendly and of a helpful nature.
3. NATURE OF INDUSTRY/INDUSTRY DEVELOPMENTS

3.1 NATIONAL STATISTICS
The ZIMSTAT is the biggest statistics board in Zimbabwe. There are some
small non-governmental organizations that conduct surveys on a
limited scale due to the high costs involved in survey operations.
3.2 ORGANIZATIONS DIVISIONS
The organization has two major divisions, namely Social and Population
Statistics and Economic Statistics as shown earlier on by the organizations
organ gram.
3.2.1 Social and Population Statistics
17
This division consists of two major branches,

a) Household Surveys
This branch consists of the household and cartography section, which deals
with the actual fieldwork. The staffs of this section conduct the required
surveys for all the other sections and do the entire mapping if required.
b) Demography and Social Statistics
This branch consists of the following sections:
i.
Health Statistics
ii.
Social Statistics
iii.
Censuses
iv.
Labour and Education Statistics
3.2.2 Economic Statistics

This division again has two major branches,
a) Production Statistics, which consists of:
i.
Industrial Statistics
ii.
Agriculture Statistics
iii.
Foreign Trade Statistics

18
b) Income Analysis, which has the following sections:

i.
National Accounts Statistics
ii.
Finance Statistics
iii.
Prices Statistics
3.2.3 The above listed two divisions operate under the two deputy directors
and the four branches operate under the four assistant directors. The senior
executive officer is in charge of the administration, the library, the typing
pool and the registry departments.
4. PRODUCT /SERVICE MARKETS

As shown in the organisations organ gram there are several branches and
sections that make up the CSO, all which publish different data for different
markets. I personally was working under the Prices Section, which is under
the income analysis branch.
Prices Section Publications

19
The Prices Section deals only with data which concerns the prices of
commodities or services. The section calculates and publishes a number of
indices which are mostly used in the business sector.
Consumer Price Index (CPI)
The Household Survey Section conducts the Consumer Price Survey (CPS).
The data is used by the Prices Section to calculate the Consumer Price
Index. The CPI is an economic indicator that is very useful in decisionmaking by the government, business and other sectors of the economy. A
Price Index measures the average change in prices of a basket of consumer
goods and services as a percentage of the average price of the same goods
and services at a previous or base period. The CPI is used as a measurement
of food and all items inflation. It is also used in the determination of bank
interest rates and the purchasing power of the consumer.
Producer Price Index (PPI)
The PPI measures the changes in the cost of production from one period to
the other. In general the PPI measures the inflation experienced in the
production of goods.
Civil Engineering Price Index (CEPI)
The CEPI measures the changes in the prices of civil engineering materials.
Building Materials Price Index (BMPI)
20
The BMPI measures the cost in the production of building materials from
one time period to another. It also measures the inflation experienced in the
production of building material.
Poverty Datum Lines (PDL)

The PDL represents the cost of a given standard of living that must be
attained if a person is deemed not to be poor. It is calculated from the
minimum needs basket, which is consistent with the preferences of the poor
individuals and households in Zimbabwe.
5. COMPANY-SOCIETY CONNECTION
a) Relationships with the Educational Sector
The first relationship I noticed between the organization and the society,
namely the educational society was shown by the number of students the
organization accepted for attachment. By February 2005 there were a
total of seven students. This alone showed that the organization seeks to
establish good relations with its society, by helping students achieve their
academic goals.
21
b) Relations with the business/finance sector

When the organization releases some of its figures/indices like the
Poverty Datum Line it hosts a number of concerned parties from the
business world to officially announce the figures and educate the people
on how the printed figures were arrived at and how to rightfully interpret
them and thereby establishing good communications with present sectors.
c) General Relations
Some of the surveys conducted by the CSO require a lot of staff to verify
the questionnaires and capture the data. This then leads to the availability
of part-time jobs to which the qualified general public is invited, reducing
though for a short period of time, unemployment.
The organization is however dormant in the education of its members or
the society at large on the awareness of diseases like HIV and AIDS,
Cancer and other known fatal diseases. Due to the organizations tight
budget, it has not made any known donations to the needy, orphans and
many more, nor has it run any promotional programs.
6.PERSONAL DEVELOPMENT
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6.1 STRENGHTS
i.
Discipline
When I joined the Central Statistical Office I aimed at being of my
best discipline and to a large extent, I think I achieved that. I attended
work on almost all required days and was only absent for clear
reasons. I was never involved in any demonstration acts nor was I
ever warned of my behaviour on any occasion.
ii.
Grasping new concepts

New concepts were introduced a number of times and I was in general
able to grasp them within a short space of time. Most of the new
concepts involved mathematical formulas, which required total
accuracy for the data to be considered reliable. I was also introduced
to a lot of Microsoft Excel concepts, which I soon lent to help me in
the data processing.
iii.
Supervision
I was able to work with very minimal supervision. Most work had
target dates by which it had to be finished, as data users will be
anxiously waiting for the data requiring one to do his/her part in time
without much follow up.
23
iv.
Advice and criticism
Like any other individual I made my mistakes but I was ready to take
advice from my colleagues. I also accepted criticisms without
personalising any issue. Where I needed to get new instructions I
sought so as to redo the work correctly.
6.2 WEAKNESSES
I sometimes could not handle the pressure from the work we were given
and my patience to tolerate anything was thereby pushed away.
I was also sometimes too emotional over minor quarrels with my
workmates and that slightly affected the way I worked.
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7. CONFLICT BETWEEN PERSONAL/ ORGANIZATION

OBJECTIVES
Oneinevitablepartoforganizationallifeisconflict,stemmingasmuchfrom
structuralcharacteristics,andasmuchfromincompatiblepersonalities.
Generally,anorganizationhasscarceresources,employeeswithdiverse
interestsandoutlooksotherattributesthatmakeconflictaconstantreality.
Conflictcanbedefinedasthatbehaviourbyorganizationmemberswhichis
expendedinoppositiontotheothermembers,andoccurswhentwoormore
partieswhoseinterestsorgoalsappeartobeincompatible.
ResolvingConflicts
OnewayIresolvedconflictswasbyincreasinginteraction.Ifiguredthatthe
moreIinteractedwithpeoplethemorelikelyIwastofindcommoninterests
andbondsthatfacilitatedcooperation.
Ialsoresolvedsomeofmyconflictsbyfollowingtheformalauthority
channel.Idiscoveredthattheauthoritythatsupervisorshaveover
conflictingpartiesisimportantenoughanditsusagespreadsowidelythatit
canbetermedaresolvingtechnique.
25
AnotherwayIfoundeffectivethatIalsousedtosolveconflictswasby
reducinginterdependenceforbybeingindependentwhereverpossible
reducesquarrel.ByalsomergingmyselfwiththeotherconflictingpartyI
figuredIcouldexpandmyboundariesandabsorbthesourceoftheconflict.
AnexampleofaconflictIpersonallydealtwithwaswhenIwasaskedto
completesomeurgenttaskwhichrequiredsometimetobecompleted,and
wasalsosupposedtobeworkingonmyworkrelatedlearningreportsinceit
wasalmostdue.Tosolvethis,Ihadtomergemyselfwiththeconflicting
partyanddotheurgenttaskfirstandthencontinuewithmyreport.
SomeoftheconflictsIhadarosefromgettingnotsomuchpleasantanswers
frommyworkmates,whichwasmostlyaresultoftoomuchdependenceand
toresolvethatIhadtoreducethatdependency.Someotherconflictswere
personalandIresortedtofollowingtheformalchannelofgrievances.
26
8. KEY SKILLS DEVELOPMENT

8.1 SKILLS DEVELOPED
a. Communication Skills
I indeed got to learn a lot of communication skills. I got to learn how to
write internal letters, normally referred to as memorandums. E-mailing
was another common means of communication in the organization in
which I enhanced my skills besides the common telephone means.
b. Planning techniques and Time Management
I also was introduced to effective planning methods and how to meet
ones set plans in time.
8.2 WORK DONE
I really was involved in a lot of work at the Central Statistical Office. I

spent my entire attachment period in one section, the Prices Section,
which is involved in the calculation of a number of indices as stated
earlier on but with the Consumer Price Index (CPI) as the most urgent
27
and demanding one. Under this heading I will outline the work I was
involved in and show some of the technical skills I developed as will be
brought out in the explanations.
.8.2.1 Calculation of the CPI
To calculate the CPI we use the Laspeyres formula. Currently method 3,
the modified Laspeyres formulae is used, as will be shown below but I
shall also include the first two so as to show how the third method is
derived.
The Laspeyres Price Index Formula

The purpose of this note is to illustrate the three methods of calculating the
Laspeyres Index .The third method is the Modified Laspeyres Index.
Assume the index basket consists of four items (Bread, Sugar, Flour, Jam).
The price (p) and quantity (q) data are given in Table 1; the subscripts 0, 1, 2
and 3 refer to different periods - months in the case of the CPI. Period 0 is
referred to as the base period. Quantity data is only available in the base
period. If consumers continue to buy the same quantity in subsequent
28
periods, then the Laspeyres Price index will give us a measure of the overall
price change of this budget.
Table 1: Price and quantity data
qo
po
p1
p2
p3
Bread
Sugar
100
70
8
10
10
12
10
14
12
16
Jam
50
25
10
12
8
15
12
18
10
20
Method 1: Use of the standard Laspeyres Price Index formula

4
It
p q
i 1
4
p
i 1
it io
100
(1)
io io
In formula (1), the first subscript indicates the item (i = 1, 2, 3, 4) while the second
subscript is for the period (t = 0, 1, 2, 3).
Table 2 shows the indices in the last column obtained as a ratio (scaled by a factor of 100)
of the sum of cross products of the values in the last row; the sum of the base cross
products being the denominator.
Table 2 Index Computation using the standard Laspeyres
qo
po
p1
p2
p3
Bread
Sugar
Flour
100
70
8
10
10
12
10
14
12
16
50
10
12
10
Jam
25
12
15
18
20
2300
2615
3030
3320
pi t qi t
It (pi qo)(po
qo)*100
Io
100.00000
I1
113.69565
I2
131.73913
I3
144.34783
29
ie
I0 = 2300/2300*100 = 100
I1 = 2615/2300*100 = 113.69565
I2 = 3030/2300*100 = 131.73913
I3 = 3320/2300*100 = 144.34783
The source for such data is a household budget survey like the Income Consumption and
Expenditure Survey (ICES). And as quantity data is seldom available from the survey,
we have to make do with the expenditure instead i.e. recorded amount e1 spent on Bread,
recorded amount e2 spent on Sugar and so on. We also need to recast the Laspeyres
formula accordingly as shown in Method 2.
Method 2: Use of Expenditure Weights and Price Relatives in the Laspeyres
Price Index formula I P
1
Wo
pt
100
p
0
w
o
(2)
The two formulas are identical since the second one is derived from the standard formula
as follows:
pq
p q
pi
p pq
p q
o
pi
w p
w
o
(3)
, where pq = w (expenditure)
30
Also in practice, instead of using the base period expenditures, the normal procedure is to
calculate base period expenditures on each item as a percentage of total base period
expenditure and then to use these percentages as weights throughout the calculation. This
procedure for calculating the (percentage) weights is illustrated in Table 3.
Table 3 Weights Calculation from Expenditure Data
qo
100
70
50
25
Bread
Sugar
Flour
Jam
Total
Base Month
po
poqo
8
10
10
12
800
700
500
300
2300
wo
34.78
30.43
21.74
13.04
100.00
The wo for Bread is obtained as (800 / 2300) * 100 = 34.78, for Sugar as (700/2300) *
100 = 30.43 and so on. In some countries, it is found more convenient for weights to sum
to 1 000 or even 10 000 enabling the assignment of very small weights to some items. If
this is done, an adjustment (dividing by 10 or 100) will need to be included in the index
formula.
The next table sets out the index computation using formula (2)
Table 4 Index Calculation using formula (2)

Base
Month
po
wo p1
Bread
8 34.78
Month 1
10 1.25
p1/po
Month 2
wop1/po p2
43.4783
p2/po
10 1.25
Month 3
wop2/po p3
43.4783
31
p3/po
12 1.5000
wop3/po
52.1739
Sugar 10 30.43
Flour 10 21.74
Jam 12 13.04
100.00
Total
12 1.20
36.5217
14 1.40
42.6087
16 1.6000
48.6957
8 0.80
15 1.25
17.3913
16.3043
12 1.20
18 1.50
26.0870
19.5652
10 1.0000
20 1.6667
21.7391
21.7391
113.6957
131.7391
144.3478
In Table 4 above, the last column of each month shows the point contribution to the index
from each of the 4 commodities. That is, for each commodity, its point contribution is the
product of the base weight (wo) and the price relative with the denominator being the base
price. This means that when the specification of a commodity changes, a base price for
the substitute has to be found; usually by assumptions and imputation. This situation can
be avoided by using the modifying the Laspeyres Price index formula.
The modification requires two changes to the formula in (2). These are:
1. In the current month, take as weights the point contributions of the previous month,
and
2. The price relative for the current month uses the previous month's price as the
denominator.
Method 3: Modified Laspeyres Index I t wt 1
pt
p t 1
(4)
We should get the same result since formula (4) is the same as formula (2) as illustrated
in the next expression, which for simplicity uses contribution of an item in period 3:
32
w2
p3
p
p p
p p p
w1 2 3 wo 1 2 3 w0 3
p2
p1 p 2
p0 p1 p 2
p0
(5)
Table 5 Modified Laspeyres Price Index calculation using formula (4)

Base
Month
wo
po p1
Bread
Sugar
Flour
Jam
Total
Month 1
p1/po
Month 2
w1=wop1/po p2 p2/p1
Month 3
w2=w1p2/ p3
p1
p3/p2
w3=w2p3/p2
34.78
10 1.25000
43.4783
10 1.00000
43.4783
12 1.20000
52.1739
30.43
10
12 1.20000
36.5217
14 1.16667
42.6087
16 1.14286
48.6957
21.74
13.04
10
12
8 0.80000
15 1.25000
17.3913
16.3043
12 1.50000
18 1.20000
26.0870
19.5652
10 0.83333
20 1.11111
21.7391
21.7391
100.0
113.6957
131.7391
144.3478
The monthly inflation is thus found by calculating the percentage change in the index of
the current month compared with that of the previous month. That is, month on month
inflation rate for month 3 is given by (144.3478/131.7391-1)*100 = 9.33 %.
The year on year inflation rate is thus given by the percentage change in the index of the
relevant month of the current year compared with that of the same month in the previous
year. For example if the previous year index for month 3 was 50.5 then the year on year
inflation would be (144.3478/50.5-1)*100 = 185.84 %.
Using the sample data in Table 1, all three methods produce the same results. Since
Method 1 is not operationally feasible due to the absence of base quantity data, the choice
33
is between the remaining two. Method 3 (Modified Laspeyres) is then chosen for the
following reasons:
1. It is conceptually and operationally more satisfactory than Laspeyres formula

(method two).
2. Operationally, both methods (2 and 3) require the statistician to collect prices of a
substitute not only in the current month (when a substitute is made) but its price in the
previous month.
Method two then requires the statistician to impute an artificial base price for the
substitute whereas with the modified method, this is not necessary. This means that
incorporating new specifications into the index basket is much easier.
3. Also there is no need to update the base price file. With method two, items that will
have 'lost' their base prices are not included in the index computation although price
quotations are being collected continuously. Where there has been an inversion of
price movements i.e. where the price of a substitute is higher than that being replaced,
its imputed base price is less than the old one. This would result in an over estimation
of the index.
4. The weighting structure of the modified Laspeyres index is dynamic, rather than
static. With the Laspeyres formula (method two), price relatives pt p o are multiplied
by a fixed base weight wo to produce the current index.
34
With the modified Laspeyres formula, the base weights are

automatically updated from one period to the next and the index
for time t is the product of the price relative p t p t 1 and the
C1
C2
C3
C4
Total
wo
34.78
30.43
21.74
13.04
100.00
weight wt-1. The insert opposite compares the original base weights with the new
weights in Period 3 in percentage terms.
5. As noted above, in this example both the traditional and the modified formulas
produce the same results because there has been no substitution of specifications
made.
6. The principal draw back of the modified formula is that it will propagate input price
errors but this can be avoided with a well-designed editing and validation system.
Also rounding errors will not pose a problem since the index is computerised.
8.2.2 Calculation of other indices

All the other indices are done quarterly unlike the monthly CPI and use a slightly
modified Laspeyres formula which combines concepts of method two and three above.
The Civil Engineering Price Index, the Building Materials Price Index and the Producer
Price Index all use the formula below.
I t w0
pt
pt 1
(6)
Table 6 Modified Laspeyres Price Index calculation using formula (6)

35
w3
36.14
33.73
15.06
15.06
100.00
Base
Month
wo
po p1
Month 1
p1/po
Month 2
wop1/po
p2 p2/p1
W0p2/p1
A1
34.78
10 1.25000
43.4783
10 1.00000 34.7826
A2
A3
A4
Total
30.43
10
12 1.20000
36.5217
21.74
13.04
10
12
8 0.80000
15 1.25000
17.3913
16.3043
14 1.16667 35.50177
12 1.50000 32.61
18 1.20000 15.648
100.0
Month 3
p3
p3/p2
12 1.20000
41.736
16 1.14286 34.77723
10 0.83333 18.11594
20 1.11111 14.48874
118.5424
113.6957
W0p3/p2
109.1179
8.2.3 Other Work

I was also involved in the calculation of Poverty Datum Lines that are derived from
indices computed from prices of a selected minimum needs basket. The organization also
engaged into the calculation of base weights for the CPI using the ICES 2001 data, in
which I was heavily involved. Currently the 1995 base weights are being used.
The Central Statistical Office was involved in a worldwide project known as the
International Comparison Program (ICP). This programme seeks to enable:
Economists to compare the average wealth of the 150 participating countries for
the purposes of a fair allocation of development aid.
The calculation of a special type of exchange rate known as the Purchasing Power
Parity (PPP) - which is based on the comparison of prices and therefore reflecting
the market reality.
The program began January 2005 and is conducted almost the same as the CPS and CPI
save for the larger and strict specifications of the ICP basket.
36
8.3 WORKSHOPS, SEMINARS AND MEETINGS ATTENDED

I was also involved in some seminars at the CSO. The first I attended was a one-week
seminar at the Kadoma Hotel and Conference Centre where we were being trained on
how and what to train the ICP data collectors. After that we then attended a nine-days
seminar where we were now training the enumerators on how to collect the ICP data.
We had with us the relevant literature that we distributed and used the time we had to
explain all the unclear points.
We also went into the field for the actual data collection practice showing the
enumerators how to rightfully fill in the questionnaires.
For the first month (January) I was tasked to do the project supervision for nine days in
Bulawayo and Matebeleland provinces with other trainers going to different provinces to
ensure that all proceedings were being rightfully followed and also to do the quality
control.
We also helped in the data collection in Mashonaland East for the following two months
with six days of collection for each month.
37
10. RE-ENTRY
10.1 Re-entry
The one-year work related learning period was indeed of great importance to both my
social and academic life. It changed the way I viewed everything as I grew mentally and
in many other aspects.
When I began my period I felt I had acquired some knowledge to help me in the relevant
industries from the two years I had spent at college. The courses I had done from
Mathematics, Statistics and Computer Science really helped in my operation during this
period. The working environment I was exposed to required one to also have some
knowledge in Economics and that prompted for my little study of the subject and I feel
that in a way will help me in my final year studies to know how to apply mathematics to
the economic sector and also in courses like Econometrics.
38
During the attachment period I was also able to realise my academic weaknesses and that
in my re-entry will help me know how to work since I will know what really to work
against. In my re-entry I will now know how to effectively plan and meet my goals with
the goal realisation techniques that I learnt during the work-related learning period.
Since I now know the career I want to follow, the attachment period also made me know
which courses to choose when I go back to college, that is, if I am to choose among given
courses. My ability to focus on anything I want was also changed and I believe I will be
much improved in the way I take my studies.
I also look forward to finishing the degree program in 2006 and follow up on my career,
that alone affecting the attitude I will have in my re-entry.
10.2 Recommendations
39
THE END
COMPILED BY : DANIEL DOVOROKWA
SIGNATURES
Statistician (MrChikadaya)
Senior Statistician (Mr.damba)
Assistant Director (Mr.N.Taruvinga)
Stamp
40
9. OVERVIEW
There are a number of theories and formulas that I found myself constantly referring to.
The work-related learning period was really helpful to me for it made me realise the
practical use of some of the common known theoretical formulas in statistics.
The organization I was attached to conducted a lot of researches and they all needed to be
analysed. I got priviledged to do an analysis in which I referred to a lot of skills that I got
from my degree program and that made me grow intellectually though it was for a long
back period, since others were doing for the latter periods. I was also priviledged to be at
this organization for it is really a mathematical environment and a relevant place for my
program.
Several techniques from Time Series Analysis were enhanced as will be shown below in
the research analysis.
The main objectives were:
1- to study the pattern of the
2- to show the trend of the prices of these commodities and make a time series analysis.
3- to try and explain the causes to these price changes.
4toanalysethechangesinthepricesovertime.
Period covered
41
Thestudycoverstheperiod1987to1995.
Priceindiceswereusedtoanalysethepricetrendofeightbasicconsumercommodities
namely,Bread,MaizeMeal,Meat,Milk,FruitsandVegetables,Rent,MedicalCareand
PublicTransport.
Data source
The index numbers for these commodities for the period 1987 to 1989 were taken from
Prices Sections monthly printouts. I have used indices from the Lower Income Group
because these consumer commodities were better covered under this group than the
Higher Income Group. The base year for these indices was 1980=100. For the period
1990 to1995, indices were obtained from monthly printouts for the National Consumer
Price Index compiled by the Prices Section and the base year is 1990= 100.
Methodology
Monthly indices for each commodity were collected and annual averages for each year
calculated. Indices for the period 1987 to1989 were rebased for them to be comparable
with the other period.
Table 1 Rebased indices for 1987 - 1989
1987
Bread
Maize Meal
Meat
Milk
Fruits & Vegetables
1988
1989
1980=100
1990=100
1980=100
1990=100
1980=100
1990=100
221.0
336.9
246.5
247.5
255.9
64.1
97.7
71.5
71.8
74.2
221.0
336.9
293.8
261.8
297.3
64.1
97.7
85.2
75.9
86.2
253.9
395.4
344.7
303.8
306.8
73.6
114.6
99.9
88.1
89.0
42
Rent
Medical Care
Public Transport
178.0
138.0
220.6
51.6
40.0
64.0
179.4
225.4
249.2
52.0
65.3
72.3
204.9
468.7
262.5
59.4
135.9
76.1
To rebase the series 1980 = 100 to 1990 = 100, I divided each index of the series by the
index for all items for 1990 (base 1980 = 100) then multiplied by 100.
e.g.
Rebased index for bread
221.0 100
344.9
64.08
336.9 100
344.9
97.68
All Items indices for these consumer commodities were calculated for each year for the
period 1987 to 1995 using the weight that each one carries in the calculation of the
Consumer Price Index.
Table 2 All Items Index
Year
Brea
d
Weights
1987
1988
1989
1990
1991
2.68
64.1
64.1
73.6
100.0
115.5
Maiz
e
Meal
4.36
97.7
97.7
114.6
100.0
120.1
Meat
Milk
7.62
71.5
85.2
99.9
100.0
127.8
1.97
71.8
75.9
88.1
100.0
121.8
Fruits
& Veg
etables
4.84
74.2
86.2
89.0
100.0
123.2
Rent
13.41
51.6
52.0
59.4
100.0
116.1
Medi
cal
Care
2.8
40.0
65.3
135.9
100.0
116.3
43
Public
Transp
ort
3.09
64.0
72.3
76.1
100.0
142.4
All
Items
40.76
64.9
71.6
85.3
100.0
121.8
1992
1993
1994
1995
179.5
307.6
358.5
406.9
193.7
293.3
347.7
419.9
186.1
256.3
305.7
390.4
188.9
249.7
304.3
355.9
200.4
246.0
445.9
549.4
147.0
205.7
243.3
267.6
144.4
169.3
415.9
488.8
223.3
255.0
297.7
355.1
175.4
239.4
316.8
375.6
To get the All Items Index the products of item weight index are summed and then
divided by the total weights for all eight items.
i.e.
weight index
weight
e.g. The All Items Index for 1987 is:

(2.68 64.1) (4.36 97.7) (7.62 71.5) . . . (3.09 64.0) 40.76
Using a three-year moving average I made a time series analysis of the All Items index.
The table below shows the index and the trend values. I also constructed a line graph with
the index and trend plotted on the same axis.
Table 3 Calculation of moving averages
Month
jan
feb
mar
apr
may
jun
july
aug
sept
oct
Index
Trend
Deviation from Trend
100.00
101.22
100.55
100.24
100.80
100.53
99.98
99.91
99.95
100.20
44
Time Series Analysis

400
350
300
250
Index
Index/Trend 200
Trend
150
100
50
0
1987
1988
1989
1990
1991
1992
1993
1994
1995
Period in Years
Results and Findings

The trend line shows a general upward and smooth increase in the cost of commodities
with the curve rising more rapidly between 1991 and 1995. This sharp increase was
probably due to several factors affecting the economy during this period. Due to ESAP
prices for basic commodities were decontrolled and subsidies removed from commodities
like fresh milk, bread, maize meal, etc. The 1991/92 droughts resulted in a rise in
45
producer prices of agricultural products causing increases in the retail prices of items like
maize meal, milk, meat and bread. Zimbabwe also had to import most of these
commodities during this period. While the price trend continues upwards, there is a
significant fall in the rate of increase from 1993 to around 1997. In the table below I have
shown the year on year percentage changes, for the whole period.
Table 4 Percentage rate of change
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
% Change
10.3
19.1
17.2
21.2
44.0
36.5
32.3
18.6
Index
64.9
71.6
85.3
100
121.8
175.4
239.4
316.8
375.6
46
Percentage Rate of Change
50
45
40
35
30
% Change
% Change 25
20
15
10
5
0
1987
1988
1989
1990
1991
1992
1993
1994
1995
Period
Conclusion and Comments to the Graph

Between 1987 and 1990 prices were controlled by the government and some basic
commodities were subsidised therefore the rate of increase was almost constant for a long
47
time. The initial inflationary effects of ESAP are shown by the rapid increase in the
percentage changes between 1990 and 1992. This was mostly due to the phasing off of
price controls and removal of subsidies and it was further aggravated by the 1991/92
droughts. The drop in the rate of change might be due to competition of the varied
consumer goods on the market. The law of demand and supply now determined price
levels instead of government regulations.
Average month on month inflation rates in 201

COMESA MEMBER
STATES
Burundi
Comoros
DR Congo
Djibouti
Egypt
Eritrea
Ethiopia
Weight
used in
2010
Jan
Dec
Feb
Jan
Mar
Feb
April
Marc
May
Apr
Jun
May
July
Jun
Aug
July
0.12
1.88
1.0
0.3
0.4
-1.5
-0.5
0.9
3.7
0.5
1.0
-0.9
0.5
0.2
-3.1
2.4
1.1
0.5
5.0
1.6
2.0
2.9
0.5
53.02
0.3
1.0
0.9
0.6
0.5
3.4
3.9
7.19
0.7
0.6
0.4
-0.3
-1.7
1.2
3.3
48

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BSc (Hons) Mathematics

1.1 Organizational Culture

1.2 Organizational Structure

3. NATURE OF INDUSTRY/INDUSTRY DEVELOPMENTS

3.1 National Statistics

3.2 Organizations Divisions

3.2.1 Social and Population Statistics

3.2.2 Economic Statistics

Prices Section Publications

Consumer Price Index (CPI)

Civil Engineering Price Index (CEPI)

Building Materials Price Index (BMPI)

Poverty Datum Lines (PDL)

5. COMPANY SOCIETY CONNECTION

DANIEL DOVOROKWA WORK RELATED LEARNING REPORT

7. CONFLICT BETWEEN PERSONAL/ORGANIZATIONS OBJECTIVES

8. KEY SKILLS DEVELOPMENT

8.1 Skills Developed

8.2 Work Done

8.2.1 Calculation of the CPI

8.2.2 Calculation of other indices

8.2.3 Other Work

8.3 Workshops, Seminars and Meetings attended

branches and sections are supported by those sections providing common

department within the Ministry of Economic Planning and Development and

Providing a contact point for international organisations and foreign

1.3.3The core values of the new agency are:

To provide statistics to the government, business community and general

To co-ordinate statistical activities so as to produce statistics that are

The increasing importance of private sector activities has made it imperative to

Organizational culture can be described as the dominant values espoused by

Integration, which is the degree to which units within the organization

User focus ; All actives of Zimstat shall aim at understanding and

Integrity and credibility; To create and maintain public trust in official

production and transparency , in data production and dissemination

Population and Social Statistics

Registry and Finance

Social Statistics Branch

Foreign Trade Statistics

(Statisticians and Clerks)

Judicial and Social Welfare

1.10 CHAIN OF COMMAND

Economic Statistics Branch

Population and Social Statistics

1.12 Statistics and Surveys within the Zimbabwe National Statistical

Just as much as I expected to get help from my supervisors on most

3. NATURE OF INDUSTRY/INDUSTRY DEVELOPMENTS

This division consists of two major branches,

Labour and Education Statistics

3.2.2 Economic Statistics

Foreign Trade Statistics

b) Income Analysis, which has the following sections:

National Accounts Statistics

4. PRODUCT /SERVICE MARKETS

Prices Section Publications

Poverty Datum Lines (PDL)

b) Relations with the business/finance sector

Grasping new concepts

Advice and criticism

7. CONFLICT BETWEEN PERSONAL/ ORGANIZATION

8. KEY SKILLS DEVELOPMENT

8.2 WORK DONE