Following are the steps involved in the construction of consumer price index number.
1. Object and scope: The purpose/object is decide for which the index number being constructed as to Farmers, Govt, employes, merchants etc and the scope i.e., geographical area, income group, the time limit for the completion of construction of index number should be decided.
2. Conducting family budget survey: A detailed survey regarding the average expenditure of the families, on various items of consumption, quality/grade of items under the heads of
• Food
• Clothing
• Housing
• Fuel and lights
• Medicine, Education entertainment and
• Miscellaneous are conducted.
3. Obtaining the price quotation: The price list of various items/commodities of current year and base year are obtained from different agencies such as from marketing inspectors, rent control officers, super bazars, Janatha bazars or public distribution system of retail prices are obtained or averaging the prices of various shops in the respective area.
4. Methods of construction: Decision has to be made on the basis of purpose, accuracy need and the availability of data, among
Aggregative expenditure method
Family budget method.
