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Volume 9, Issue 5, September 2020, Page: 238-244
Arima Forecasting Model for Uganda’s Consumer Price Index
Yeko Mwanga, School of Statistics and Planning, College of Business and Management Sciences, Makerere University, Kampala, Uganda
Received: Sep. 10, 2020;       Accepted: Sep. 23, 2020;       Published: Oct. 12, 2020
DOI: 10.11648/j.ajtas.20200905.17      View  14      Downloads  15
Abstract
In Uganda, the Central Bank watches closely inflation which happens to be one of the key macroeconomic indicators for which the central bank rate is anchored on. Uganda Bureau of Statistics disseminates monthly Consumer Price Indices (CPIs) to the various stakeholders. Currently, the CPI is computed for eight urban centres spread across the country. The monthly CPIs serve mostly those users who require past and current inflation rates. The main objective of this study is to identify and estimate an ARIMA model for the CPI and use it to make short term forecasts. We relied upon monthly Consumer Price Indices from January 2010 to July 2020 obtained from Uganda Bureau of Statistics. The time series was transformed so as to make it stationary, before identification and estimation of ARIMA (p, d, q) x (P, D, Q)12 models. An ARIMA (1, 1, 1) (0, 1, 1)12 with no constant was selected as the best model, because it had the least AIC and BIC. Additionally, all the coefficients of the ARs and MAs were significant at 1% level. Using the selected model, inflation forecasts were generated for 12 months (August 2020 to July 2021) and found to fluctuate between 4.7 and 6 percent. We recommend this model to Uganda Bureau of Statistics and Central Bank to use it to make forecasts and disseminate them to users. In conclusion, generally good forecasts are vital for better resource allocation, planning and decision making.
Keywords
Consumer Price Index, Inflation, ARIMA Model, Forecasts, Uganda
To cite this article
Yeko Mwanga, Arima Forecasting Model for Uganda’s Consumer Price Index, American Journal of Theoretical and Applied Statistics. Vol. 9, No. 5, 2020, pp. 238-244. doi: 10.11648/j.ajtas.20200905.17
Copyright
Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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