IMF Staff Country Reports

This Technical Assistance report on Cabo Verde explores Consumer Price Index (CPI). Current CPI weights are based on expenditure data collected during the 2015 household income and expenditure survey. These data are out of date and there is urgent need to update CPI weights. Overall, the methods used to compile the CPI for Cabo Verde largely reflect international standards and best practices; however, there is scope for improvement. Index calculation methods should be based on the modified or short-term formula. This index calculation formula, recommended in the 2020 CPI Manual, is more flexible and allows the outlet and variety samples to remain representative and facilitates the introduction of new items. Instituto Nacional de Estatística Cabo Verde (INECV) has defined the rolling 12-month average as the headline or official index. The 12-month rolling average smooths the data. The headline index (official inflation rate) should not be adjusted or smoothed. It was recommended that INECV begin using the annual (12-month) change as the headline or official inflation rate for Cabo Verde.