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The Census and Statistics Department (C&SD) is committed to compiling and publishing a wide range of high-quality social and economic statistics. Although their planning and compilation involve complex statistical concepts and designs, the statistics are closely related to our lives.
Taking the 2014/15 Household Expenditure Survey (HES) to be conducted by the C&SD in October 2014 as an example, the statistics compiled are meant to reflect consumption behaviour.
As smart consumers, people take into account various factors before purchasing in order to enjoy more and better goods or services with the same budget. In particular, consumers shop for items that have the best prices in the market. If the price of a particular item rises, most consumers will substitute the item with other cheaper and acceptable choices. People tend to purchase goods or services with lower price increases so as to maximise the level of enjoyment that can be attained within the same or a smaller budget. This phenomenon is a typical example of the "price effect" which results in the reduction of demand due to price rises.
The price effect may be further analysed with the "income effect" and the "substitution effect". Although the terms seem to be abstract, they are related to common spending behaviour and should not be too difficult to understand. They can be illustrated through an example of buying food. Assuming Mrs Lee plans to use $100 to buy cabbage, beef and golden thread for her family's dinner, if the price of white cabbage rises fairly sharply in one day, this will affect Mrs Lee's consumption behaviour in two respects. First, Mrs Lee would buy less white cabbage so that the total purchase for the family dinner would not exceed her budget. This is the "income effect". Second, she may consider other similar and less expensive but equally acceptable choices, such as Chinese lettuce, in order to get better value for money. This shift in consumption behaviour is called the "substitution effect".
However, the magnitude of the price effect in different goods and services depends on the elasticity of demand, such as whether the goods are necessities like food staples. Individual consumption preferences may also change along with the fluctuations in the price levels of goods and services. While these changes would occur gradually over time, the cumulative impact on expenditure patterns will become pronounced over a prolonged period.
Specifically, consumer demand drops for items with faster price increases and the items in turn constitute smaller shares in the consumption basket, and vice versa. Therefore, it is important for the C&SD to conduct the HES once every five years as it provides important source data that reflects the influence of the price effect on expenditure patterns. By using the survey results, the C&SD rebases the Consumer Price Index (CPI) and updates the expenditure range and weighting of the CPI series. In this way, the CPI will fully reflect inflation in Hong Kong, the measure of which serves as an important parameter for the formulation of social and economic policies.
Major results of the new round of the HES and the 2014/15-based CPI will be published around mid-2016. For details, please visit the following website:
www.censtatd.gov.hk/survey_respondents_corner/hes/index.jsp.
Ends/Wednesday, July 30, 2014
Issued at HKT 17:02
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