This paper illustrates the methodological steps involved in estimating price deflators for Iraq
on the basis of the 2007 Iraq Household Socio-Economic Survey. We first deal with the
construction of a temporal consumer price index required to adjust household expenditures for
the effect of inflation. Next we discuss the choices made for construction of a spatial consumer
price index to adjust household expenditures for differences in price levels between different
regions in Iraq. The estimated price deflators allow one to estimate the real purchasing power
of Iraqi households’ expenditures and incomes, which is a prerequisite for comparing welfare
across population groups and informing policy makers engaged in designing poverty reduction
strategies.