## Section I. Detailed Technical Assessment and Recommendations

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---

### Mission overview and priority recommendations
- Mission dates: January 15–26, 2024.
- Objective: Assist the Economic Policy, Planning and Statistics Office (EPPSO) of the Republic of the Marshall Islands (RMI) to update their consumer price index (CPI), resample the basket of goods and services, estimate new expenditure weights from the 2019/2020 HIES, and develop an action plan.
- Outcomes:
  - Updated CPI basket of approximately 120 items was developed and classified by COICOP 1999.
  - New expenditure weights were derived for Majuro, Ebeye, and a potential national CPI using the 2019/20 HIES.
  - A detailed action plan for updating the CPI with a target date of September 2024 was developed and agreed.
  - Capacity building and practical training were provided to EPPSO staff.
- Priority recommendations (selected from Table 1):
  - February 2024 — Consult on whether CPIs are required for both Majuro and Ebeye in addition to a new national CPI. Responsible: EPPSO.
  - March 2024 — Develop item descriptions and specifications for the updated CPI basket. Responsible: EPPSO.
  - September 2024 — Publish the updated CPI. Responsible: EPPSO.

### Action plan highlights (selected milestones)
- February 2024: Launch consultation on the continued requirement of CPIs for both Majuro and Ebeye in addition to a new national CPI.
- March 2024: Develop detailed item descriptions and specifications for the new CPI basket; test and review item descriptions in both Majuro and Ebeye; review and update sample of outlets.
- April 2024: Develop new price collection sheets and new data entry Excel workbooks for the updated CPI.
- May 2024: Collect prices for the current CPIs in Majuro and Ebeye for the last time; collect prices for the updated CPIs in Majuro and Ebeye for the first time (overlap collection commences).
- June 2024: Disseminate the current CPI for the last time; preannounce the planned update of the CPI.
- July–August 2024: Develop and test new Excel workbooks for the updated CPI; collect prices for the updated CPI for the second time; draft metadata.
- September 2024: Calculate the updated CPI for the first time; update the quarterly report template; link the current and updated CPIs; disseminate the updated CPI.

### A. Majuro and Ebeye CPIs — technical assessment and recommended operational actions
- Current references and operational practice:
  - Price reference period: 2003 Q1 for both indexes.
  - Weights reference period: 2002 (from a HIES survey conducted in 2002).
  - Index reference period: 2003 Q1 = 100.
  - Two CPIs produced: Majuro and Ebeye. No national index currently; Majuro CPI used as proxy for national CPI.
  - Prices collected quarterly (four times a year) in the second month of each calendar quarter.
  - Collection timing: Majuro second week of the quarter; Ebeye third week.
  - EPPSO staffing: 11 staff, 4 in statistics office.
  - Price collection outlets and sample sizes:
    - Majuro: prices collected in 31 outlets.
    - Ebeye: prices collected in 13 outlets.
    - On average, five prices are collected for each item.
  - Data collection medium: paper; EPPSO has acquired tablets but lacks budgeted software.
- Classification and coverage gaps:
  - Current CPI uses a bespoke classification not aligned with COICOP.
  - Current CPI basket: 61 items; underrepresentation or absence of household consumables, motor vehicles, transport by road and sea, recreational goods and services, personal care products and services, financial services, vehicle insurance, etc.
- Missing prices and seasonality:
  - Missing prices are carried forward currently.
  - Recommendation: ascertain whether missing is permanent or temporary; replace permanently missing products immediately; impute temporarily missing prices using similar items; replace if missing in subsequent quarter.
  - Seasonality: generally weak due to prevalence of imports; imputation for out-of-season items generally not required.
- Quality/quantity changes and index calculation:
  - No quality or quantity adjustments are currently made when items are replaced.
  - Recommendation: adjust for quantity changes (e.g., pack-size reductions) and reflect as price changes in the CPI.
  - Current elementary aggregate formula: Dutot (arithmetic mean). Aggregation: Laspeyres-type (Young) approach.
  - Recommendation: adopt Jevons (geometric mean) formula for elementary aggregate indexes to align with international best practice.
- Dissemination and metadata:
  - CPIs disseminated quarterly to a preannounced timetable on paper and on the EPPSO website.
  - Currently disseminated: all-items CPI and main groups.
  - Recommendation: draft and publish metadata to accompany updated CPIs.
- Explicit recommended operational actions:
  - Prices in Majuro and Ebeye should be collected in the same week on both islands.
  - Increase number of prices for frequently purchased items and for school tariffs.
  - Expand coverage of the CPI basket and adopt COICOP 99 as part of the planned update.
  - Reflect changes in quantity as price changes in the CPI.
  - Use the Jevons formula for calculating elementary aggregate indexes in the updated CPI.
  - Draft and publish metadata for the updated CPI.

### B. Updating the CPI basket and expenditure weights
- Rationale and frequency:
  - Expenditure weights and CPI basket are out of date (weights from 2002; index referenced to 2003 Q1).
  - Recommendation: update periodically; international best practice suggests every five years, subject to resources.
  - Recommendation: EPPSO should consider conducting HIES surveys more frequently.
- Classification adoption:
  - Updated CPI will adopt COICOP 99 classification (used to a large extent in the 2019/20 HIES).
- Updated basket:
  - New basket developed using 2019/20 HIES detailed expenditure results (national level): approximately 120 items.
  - Basket optimized to reflect each COICOP division’s expenditure share and heterogeneity.
  - Gaps remain for some items omitted from HIES (notably financial services); recommendation: future HIES should include all household expenditures.
- Updated expenditure weights (COICOP 2-digit division level; Table 3: 2024 CPI Weights)
  - 01 Food & Non-Alcoholic Beverages: National 35.4; Majuro 34.5; Ebeye 33.0
  - 02 Alcohol & Tobacco: National 5.2; Majuro 4.1; Ebeye 6.5
  - 03 Clothing & Footwear: National 4.1; Majuro 3.9; Ebeye 3.3
  - 04 Housing, Water, Electricity, Gas & Other Fuels: National 11.0; Majuro 10.2; Ebeye 16.0
  - 05 Furnishings, Household Equipment & Routine Maintenance: National 5.5; Majuro 5.4; Ebeye 5.1
  - 06 Health: National 0.2; Majuro 0.2; Ebeye 0.1
  - 07 Transport: National 10.7; Majuro 13.0; Ebeye 5.5
  - 08 Communication: National 3.0; Majuro 3.4; Ebeye 1.6
  - 09 Recreation & Culture: National 1.9; Majuro 1.9; Ebeye 1.6
  - 10 Education: National 1.4; Majuro 1.5; Ebeye 1.7
  - 11 Restaurants & Hotels: National 15.4; Majuro 15.6; Ebeye 19.4
  - 12 Miscellaneous Goods & Services: National 6.3; Majuro 6.2; Ebeye 6.1
  - Total: National 100.0; Majuro 100.0; Ebeye 100.0
- Comparison with 2003 weights:
  - Direct comparison of 2003 and 2024 weights is not meaningful due to age, classification differences, and absence of underlying household expenditures for 2003.
  - Selected 2003 CPI weights (All Groups, Majuro and Ebeye):
    - Food: 35.9, 46.7
    - Alcoholic Beverages: 1.7, 1.4
    - Housing, Utilities and Major Appliances: 17.1, 15.9
    - Apparel: 4.3, 6.1
    - Transportation: 13.7, 12.3
    - Medical Care: 2.2, 0.9
    - Recreation: 2.3, 2.2
    - Education and Comm.: 6.6, 4.4
    - Other Goods and Services: 16.2, 10.1
    - All Groups: 100.0, 100.0
- Recommendation action:
  - EPPSO should aim to conduct HIES surveys more frequently.

### C. Strategic considerations, user consultation, and implementation
- National CPI development:
  - A national CPI will use national expenditures for the weights, with price collection limited to Majuro and Ebeye.
  - Price collection in outer islands is not practical due to remoteness, small populations, and limited number of outlets; most goods in outer islands are directly shipped from Majuro and Ebeye.
  - Shipping costs are fixed by the government and rarely change.
  - Development of a national CPI would improve representativity. Currently Majuro CPI used as proxy as Majuro accounts for over half of RMI population.
  - The requirement for two separate CPIs (Majuro and Ebeye) appears historical rather than policy-driven.
  - Key decision required: whether a national CPI will replace the two current CPIs or be supplemental. Decision should be informed by early consultation with key users.
- Implementation timing and capacity constraints:
  - Action plan target date for dissemination of updated CPI: September 2024.
  - All target dates in the action plan are indicative due to limited staff resources and staff capacity.
  - Training provided covered the updating process, item and outlet sampling, derivation of weights, and developing item descriptions and specifications.
- CPI basket, item specifications, and sampling:
  - New and expanded CPI basket of around 120 items developed.
  - For new items, item descriptions and specifications need to be developed and field-tested.
  - For items carried over from the current basket, existing item descriptions and specifications should be reviewed for current relevance and tested in the field.
  - Outlet sample should be reviewed and expanded to reflect the expanded coverage, especially for service providers (services are not well represented in the current CPI basket).
  - For goods, the sample of outlets is likely to remain broadly similar given the limited number of outlets and the size of the consumer market in RMI.
- Price collection, overlap, and linkage:
  - New price collection worksheets must be developed; these should be separate from current price collection worksheets because item descriptions and specifications for carried-over products may have changed.
  - An overlap price collection is required: prices for the current and updated CPI should be collected at the same time in at least one month to allow linking of series.
    - Target date for concurrent price collections: May 2024.
    - Mission recommended an overlap period of one quarter (month) given weak seasonality and limited staff resources.
  - The current and updated CPI index series should be linked to provide a long-run index series.
    - Due to differences in classification and limited product coverage of the current CPI, it will not be possible to retrospectively apply the COICOP 99 classification to historical data.
    - Linking may only be possible at the all-items index and for some selected product groups.
- Systems, classification, and preannouncement:
  - A new Excel-based workbook is required for compilation of the updated CPI.
    - Majuro and Ebeye CPIs are currently calculated in separate Excel workbooks which cannot easily be adapted to the updated basket and the new COICOP classification.
    - EPPSO is likely to require external assistance to develop the new workbook.
  - The update of the CPI should be preannounced alongside the publication of the 2024 Q2 index (June 2024).
    - Preannouncement should inform users that the updated CPI will use new expenditure weights, an updated basket of goods and services, and that the CPI will adopt the COICOP 99 classification from the update.
- Transparency and metadata:
  - There are currently no metadata describing the coverage and methodology of the CPIs in the RMI.
  - Recommendation: draft metadata describing methodology, classification, and coverage of the CPIs to enhance transparency and public trust.
- Recommended actions (as listed):
  - EPPSO should consult key users on the future strategy for CPIs in RMI.
  - The sample of outlets should be reviewed and expanded.
  - New price collection sheets should be developed.
  - A new Excel workbook should be developed for calculating the updated CPI.
  - The current and updated index series should be linked where possible.
  - The updating of the CPI should be preannounced.
  - Metadata should be drafted and released alongside the updated CPI.

### Officials met during the mission
- Frederick J. De Brum — Director, EPPSO — fjdebrum@gmail.com
- Scott Keju — Head of statistics, EPPSO — Scott.keju@gmail.com
- John Henry — Senior statistician, EPPSO — Jhenry9@gmail.com
- Joyceline Mellan-Kaitil — Statistics specialist, EPPSO — Jmellan20@gmail.com
- Junior Peter — Economic Unit, EPPSO — lasugah@gmail.com

*IMF | Technical Assistance Report – Marshall Islands Consumer Price Index Mission — Section I. Detailed Technical Assessment and Recommendations*

### Section I. Detailed Technical Assessment and Recommendations ...................................................... 4

### Section I. Detailed Technical Assessment and Recommendations

### Summary of mission outcomes and priority recommendations
- Mission dates: January 15–26, 2024.
- Objective: Assist the Economic Policy, Planning and Statistics Office (EPPSO) of the Republic of the Marshall Islands (RMI) to update their consumer price index (CPI), resample the basket of goods and services, estimate new expenditure weights from the 2019/2020 HIES, and develop an action plan.
- Outcomes:
  - Updated CPI basket of approximately 120 items was developed and classified by COICOP 1999.
  - New expenditure weights were derived for Majuro, Ebeye, and a potential national CPI using the 2019/20 HIES.
  - A detailed action plan for updating the CPI with a target date of September 2024 was developed and agreed.
  - Capacity building and practical training were provided to EPPSO staff.
- Priority recommendations (Table 1):
  - February 2024 — Consult on whether CPIs are required for both Majuro and Ebeye in addition to a new national CPI. Responsible: EPPSO.
  - March 2024 — Develop item descriptions and specifications for the updated CPI basket. Responsible: EPPSO.
  - September 2024 — Publish the updated CPI. Responsible: EPPSO.

### Action plan highlights (selected milestones from Table 2)
- February 2024: Launch consultation on the continued requirement of CPIs for both Majuro and Ebeye in addition to a new national CPI.
- March 2024: Develop detailed item descriptions and specifications for the new CPI basket; test and review item descriptions in both Majuro and Ebeye; review and update sample of outlets.
- April 2024: Develop new price collection sheets and new data entry Excel workbooks for the updated CPI.
- May 2024: Collect prices for the current CPIs in Majuro and Ebeye for the last time; collect prices for the updated CPIs in Majuro and Ebeye for the first time (overlap collection commences).
- June 2024: Disseminate the current CPI for the last time; preannounce the planned update of the CPI.
- July–August 2024: Develop and test new Excel workbooks for the updated CPI; collect prices for the updated CPI for the second time; draft metadata.
- September 2024: Calculate the updated CPI for the first time; update the quarterly report template; link the current and updated CPIs; disseminate the updated CPI.

### A. The Majuro and Ebeye Consumer Price Indexes — technical assessment and recommended actions
- Current index references:
  - Price reference period: 2003 Q1 for both indexes.
  - Weights reference period: 2002 (from a HIES survey conducted in 2002).
  - Index reference period: 2003 Q1 = 100.
- Coverage and operational practice:
  - Two CPIs produced: Majuro and Ebeye. No national index currently; Majuro CPI used as proxy for national CPI.
  - Prices collected quarterly (four times a year) in the second month of each calendar quarter.
  - Majuro collection: second week of the quarter; Ebeye: third week. Staff: EPPSO has 11 staff, 4 in statistics office.
  - Price collection outlets and sample sizes:
    - Majuro: prices collected in 31 outlets.
    - Ebeye: prices collected in 13 outlets.
    - On average, five prices are collected for each item.
  - Data collection medium: prices are collected on paper; EPPSO has acquired tablets but lacks budgeted software.
- Classification and coverage gaps:
  - Current CPI uses a bespoke classification not aligned with COICOP.
  - Current CPI basket: 61 items; coverage is patchy with underrepresentation or absence of household consumables, motor vehicles, transport by road and sea, recreational goods and services, personal care products and services, financial services, vehicle insurance, etc.
- Missing prices and seasonality:
  - Missing prices are carried forward. Recommendation: ascertain whether missing is permanent or temporary; replace permanently missing products immediately; impute temporarily missing prices using similar items; replace if missing in subsequent quarter.
  - Seasonality: generally weak due to prevalence of imports; imputation for out-of-season items is generally not required.
- Quality/quantity changes and index calculation:
  - When an item is replaced, no quality or quantity adjustments are currently made. Recommendation: adjust for quantity changes (e.g., pack-size reductions) and reflect as price changes in the CPI.
  - Current elementary aggregate formula: Dutot (arithmetic mean). Aggregation: Laspeyres-type (Young) approach.
  - Recommendation: adopt Jevons (geometric mean) formula for elementary aggregate indexes to align with international best practice.
- Dissemination and metadata:
  - CPIs are disseminated quarterly to a preannounced timetable on paper and on the EPPSO website.
  - Currently disseminated: all-items CPI and main groups.
  - Recommendation: draft and publish metadata to accompany updated CPIs.
- Recommended operational actions (explicit list from the mission):
  - Prices in Majuro and Ebeye should be collected in the same week on both islands.
  - The number of prices for frequently purchased items and for school tariffs should be increased.
  - The coverage of the CPI basket should be expanded and COICOP 99 adopted as part of the planned update to the CPI.
  - Changes in quantity should be reflected as price changes in the CPI.
  - The updated CPI should use the Jevons formula for calculating elementary aggregate indexes.
  - Metadata should be drafted for the updated CPI.

### B. Updating the CPI basket of goods and services and expenditure weights
- Rationale:
  - Expenditure weights and CPI basket are out of date (weights from 2002; index referenced to 2003 Q1) and should be periodically updated (international best practice suggests every five years, subject to resources).
  - Recommendation: EPPSO should consider conducting HIES surveys more frequently.
- Adoption of classification:
  - Updated CPI will adopt COICOP 99 classification (used to a large extent in the 2019/20 HIES).
- Updated basket:
  - New basket developed using 2019/20 HIES detailed expenditure results (national level): approximately 120 items.
  - Basket optimized to reflect each COICOP division’s expenditure share and heterogeneity.
  - Gaps remain for some items omitted from HIES (notably financial services); recommendation: future HIES should include all household expenditures.
- Updated expenditure weights (Table 3: 2024 CPI Weights) — weights at COICOP 2-digit division level for National, Majuro, and Ebeye:
  - 01 Food & Non-Alcoholic Beverages: National 35.4; Majuro 34.5; Ebeye 33.0
  - 02 Alcohol & Tobacco: National 5.2; Majuro 4.1; Ebeye 6.5
  - 03 Clothing & Footwear: National 4.1; Majuro 3.9; Ebeye 3.3
  - 04 Housing, Water, Electricity, Gas & Other Fuels: National 11.0; Majuro 10.2; Ebeye 16.0
  - 05 Furnishings, Household Equipment & Routine Maintenance: National 5.5; Majuro 5.4; Ebeye 5.1
  - 06 Health: National 0.2; Majuro 0.2; Ebeye 0.1
  - 07 Transport: National 10.7; Majuro 13.0; Ebeye 5.5
  - 08 Communication: National 3.0; Majuro 3.4; Ebeye 1.6
  - 09 Recreation & Culture: National 1.9; Majuro 1.9; Ebeye 1.6
  - 10 Education: National 1.4; Majuro 1.5; Ebeye 1.7
  - 11 Restaurants & Hotels: National 15.4; Majuro 15.6; Ebeye 19.4
  - 12 Miscellaneous Goods & Services: National 6.3; Majuro 6.2; Ebeye 6.1
  - Total: National 100.0; Majuro 100.0; Ebeye 100.0
- Comparison with 2003 weights:
  - A direct comparison of 2003 and 2024 weights is not meaningful due to age, classification differences, and absence of underlying household expenditures for 2003.
  - Table 4 (2003 CPI Weights — selected lines provided in source): All Groups (Majuro, Ebeye): Food 35.9, 46.7; Alcoholic Beverages 1.7, 1.4; Housing, Utilities and Major Appliances 17.1, 15.9; Apparel 4.3, 6.1; Transportation 13.7, 12.3; Medical Care 2.2, 0.9; Recreation 2.3, 2.2; Education and Comm. 6.6, 4.4; Other Goods and Services 16.2, 10.1; All Groups 100.0, 100.0.
- Recommendation action:
  - EPPSO should aim to conduct HIES surveys more frequently.

### C. Updating the CPI — strategic considerations and user consultation
- National CPI development:
  - Development of a national CPI would improve representativity. Currently Majuro CPI used as proxy as Majuro accounts for over half of RMI population.
  - The requirement for two separate CPIs (Majuro and Ebeye) is not clearly understood and appears historical rather than policy-driven.
  - Key decision required: whether a national CPI will replace the two current CPIs or be supplemental. This decision should be informed by early consultation with key users and will guide CPI design and the update process.
- Implementation timing and capacity constraints:
  - Action plan target date for dissemination of updated CPI: September 2024.
  - All target dates in the action plan are indicative due to limited staff resources and staff capacity.
  - Training provided covered the updating process, item and outlet sampling, derivation of weights, and developing item descriptions and specifications.

_Italic: IMF | Technical Assistance Report – Marshall Islands Consumer Price Index Mission — Section I. Detailed Technical Assessment and Recommendations_

### 25. A national CPI would be based on national expenditures for the weights, with prices

### A national CPI would be based on national expenditures for the weights, with prices collected in Majuro and Ebeye

### Overview
- A national CPI will use national expenditures for the weights, with price collection limited to Majuro and Ebeye.
- Price collection in outer islands is not practical due to remoteness, small populations, and limited number of outlets; most goods in outer islands are directly shipped from Majuro and Ebeye.
- Shipping costs are fixed by the government and rarely change.

### Action plan and timeline
- A detailed action plan for updating the CPI was developed and agreed with EPPSO, targeting dissemination in September 2024.
- Actions are presented in chronological order; actions up to the end of April are highest near-term priority.
- All target dates in the action plan are indicative due to limited staff resources and staff capacity.
- Training was provided covering all aspects of the updating process.

### CPI basket, item specifications, and sampling
- The mission and EPPSO developed a new and expanded CPI basket of around 120 items.
- For new items, item descriptions and specifications need to be developed and field-tested.
- For items carried over from the current basket, existing item descriptions and specifications should be reviewed for current relevance and tested in the field.
- Outlet sample should be reviewed and expanded to reflect the expanded coverage, especially for service providers (services are not well represented in the current CPI basket).
- For goods, the sample of outlets is likely to remain broadly similar given the limited number of outlets and the size of the consumer market in RMI.

### Price collection, overlap, and linkage
- New price collection worksheets must be developed; these should be separate from current price collection worksheets because item descriptions and specifications for carried-over products may have changed.
- An overlap price collection is required: prices for the current and updated CPI should be collected at the same time in at least one month to allow linking of series.
  - Target date for concurrent price collections: May 2024.
  - The mission noted it is often preferable to have an overlap period of more than one month to take account of seasonality; however, as seasonality is generally weak in the RMI and with limited EPPSO staff resources, the mission recommended an overlap period of one quarter (month).
- The current and updated CPI index series should be linked to provide a long-run index series.
  - Due to differences in classification and limited product coverage of the current CPI, it will not be possible to retrospectively apply the COICOP 99 classification to historical data.
  - Linking may only be possible at the all-items index and for some selected product groups.

### Systems, classification, and preannouncement
- A new Excel-based workbook is required for compilation of the updated CPI.
  - Majuro and Ebeye CPIs are currently calculated in separate Excel workbooks which cannot easily be adapted to the updated basket and the new COICOP classification.
  - EPPSO is likely to require external assistance to develop the new workbook.
- The update of the CPI should be preannounced alongside the publication of the 2024 Q2 index (June 2024).
  - Preannouncement should inform users that the updated CPI will use new expenditure weights, an updated basket of goods and services, and that the CPI will adopt the COICOP 99 classification from the update.

### Transparency and metadata
- There are currently no metadata describing the coverage and methodology of the CPIs in the RMI.
- The mission recommended drafting metadata describing methodology, classification, and coverage of the CPIs to enhance transparency and public trust.

### Recommended actions (as listed)
- EPPSO should consult key users on the future strategy for CPIs in RMI.
- The sample of outlets should be reviewed and expanded.
- New price collection sheets should be developed.
- A new Excel workbook should be developed for calculating the updated CPI.
- The current and updated index series should be linked where possible.
- The updating of the CPI should be preannounced.
- Metadata should be drafted and released alongside the updated CPI.

### Officials met during the mission
- Frederick J. De Brum — Director, EPPSO — fjdebrum@gmail.com
- Scott Keju — Head of statistics, EPPSO — Scott.keju@gmail.com
- John Henry — Senior statistician, EPPSO — Jhenry9@gmail.com
- Joyceline Mellan-Kaitil — Statistics specialist, EPPSO — Jmellan20@gmail.com
- Junior Peter — Economic Unit, EPPSO — lasugah@gmail.com

*IMF | Technical Assistance Report – Marshall Islands Consumer Price Index Mission*

---


_Source: https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024048.pdf_