Prices
Patrick Kelly
Seminar on Developing a programme for the
implementation of the
2008 SNA and supporting statistics
17-19 October 2012
Pretoria, South Africa
Contents
1.
2.
3.
4.
5.
6.
7.
Structure
Overview of the current PPI
Planned changes to the PPI
Overview of the current CPI
Independent peer review of the CPI
Planned changes to the CPI
HCPI and ICP
Structure
Price and Employment
Statistics
Consumer
Price Index
Producer
Price Index
PPI
Development
Prices
Methodology
and Research
Field
operations
Data
collection
Sample
maintenance
Methodology
and research
Data
collection
Data
operations
Analysis
and
compilation
Quality Audits
Analysis
and
compilation
Compilation
&
services
collections
Quality and
performance
management
Quarterly
Employment
Statistics
PPI
PPI overview
• The South African PPI, consists of three parts
namely domestic output of South African Industry
Groups, exported commodities and imported
commodities.
• Domestic output includes the value of all
products produced within the boundaries of
South Africa, irrespective whether it is exported
or used in the domestic market. Imports are not
included in this index.
• For the Domestic output (including exports) and
Import tables respectively, prices are measured,
at the first supply phase, by South African
producers, and at the first purchasing phase,
where the goods enter South Africa.
PPI Overview
2009: Reweighting of the PPI
- Change to VA weights from national accounts
- Aggregation on SIC
- Output PPI, with aggregation of all industries
- Publish PPI, Exports, Imports and Construction indices
- Calculation remained the same; lower level Jevons; aggregation
Young
2013: Reweighting of the PPI
Planned changes to the PPI
Producer Price Index
•
Initiated project to revamp PPI
•
Aims of project:
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Align with international practices
Align with the system of national accounts
New format of PPI
•
No aggregate PPI
•
5 PPIs for domestic output – stages of
production concept
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Agriculture, forestry and fishing
Mining and quarrying
Electricity and water
Intermediate manufactured goods
Final (finished) manufactured goods – new
headline
Weights
•
Basis of PPI weights
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•
Industry level based on 2011 value-added in the
national accounts
Supply and use table splits manufacturing into
intermediate or final output
Product level uses Stats SA large sample surveys
(LSS) of industries and other industry data
Annual refresh of PPI weights
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Industry weights to be updated each year from the
annual national accounts
Product weights to be updated annually based on
available information.
Chain linking of indices between years
Classification and products
•
Classification
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•
PPI is and will be published according to SIC
Lower level classification – Central product
classification (CPC) updated from v1.1 to v2.
No significant impact from change in versions
Product list (basket)
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Products selected on importance to each industry
Extensive visits to industry associations
Old basket has over 800 products
New basket has 273 products
63 are new and 210 are in both baskets
Allows for more price observations per product
Base year and time series
•
Base year
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•
Price reference period = 2012
Time series
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Due to substantial changes, the official time series
will be broken
Backward indices for new series to January 2012
and indicative time series using historical prices
but new format and weights to January 2009
Construction indices
•
Tables of selected building materials (11 and 12)
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Mainly used for contract escalations
Small overlap with main PPI
No immediate changes to tables are planned
Steering committee of major industry associations
to be established
Committee to consider changes to weights and
product mix
Unit Value Indices – Exports
and Imports
•
Unit value indices (UVI) for exports and
imports
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Based on customs data
Weights = total value of goods traded
Price changes from value/quantity each
month
Import and Export UVI publish 2013
Further improvements
•
Behind the scenes enhancements
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New database and capturing system
Improved data collection methods and processes
Substantially higher number of prices per product
Improved quality controls
Services PPIs
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Big gap in coverage of prices in economy
Research on these to begin following publication of
new PPI
Timing governed by data availability – mainly LSS
Construction services come first
CPI
CPI overview
• The CPI is a current social and economic
indicator that is constructed to measure changes
over time in the general level of prices of
consumer goods and services that households
acquire, use, or pay for.
• The South African CPI has two equally important
objectives:
1. To measure inflation in the economy so that
macroeconomic policy is based on comprehensive and
up-to-date price information and to provide a deflator of
consumer expenditure in the expenditure national
accounts.
2. To measure changes in the cost of living of South
African households to ensure equity in the measures
taken to adjust wages, grants, service agreements and
contracts.
CPI Overview
2005: Field collection
2009: Reweighting of the CPI
- Change to COICOP
- Change of weights and base year
- Basket reduced from approx 1200 to 400 products
- Change in measurement of owner occupied housing
- Break in the series
- Calculation remained the same; lower level Jevons; aggregation
Young
2010: Drop smaller collection areas
Improved publication timing
2013: Reweighting of the CPI
Plans for reweighting of
the consumer price index
Weights
• Reweighting and rebasing to be implemented in
January 2013
• Income and Expenditure Survey –
› 12 month survey
› Fieldwork completed in August
› Processing nearing completion
› Methodology similar to 2005/6 survey (Diary and
recall)
› 2 week survey period
• IES to be adjusted for food, alcohol and tobacco, and
tourism expenditure(where necessary) using admin and
industry data
• Weights to be price updated to account for price
changes between IES and implementation
Basket
• Baskets for each primary, secondary and rural area
(currently per province) – improve relevance and number
of price observations
• Basket will be completed by September 2012
Rebasing and linking
• Price reference period (base year) – 2012
• Time series to be maintained
• Extensive resources to be provided to users
› Detailed weights and basket documents
› Updated Methods and sources document
› Explanation of linking, rebasing, reweighting methods
› Paasche and Fischer Indices for the period 2008 to
2012
Rural CPI
• Part of the total country CPI
• Currently use rural expenditure weights and prices
from secondary urban areas to compute index
• New IES question asks location of purchase
• Can map area of purchase to relevant area price
index
• Will collect food prices in rural areas – experience of
two years of rural collection for National Agricultural
Marketing Council
• Introduce new rural table
Informal sector
• CPI currently only covers formal sector
• New IES question on type of vendor
• Food prices to be collected from informal vendors
• To be included in index from 2013
Additional Indices
• Core inflation - Trimmed mean
› Excludes highest and lowest price changes each
month
› Assists in inflation analysis for monetary policy
purposes
Methodological improvements
• Quality Adjustments
› Current practice: strict like-on-like comparison
› Aim of QA is to link price changes between
substitute goods when characteristics change
› Identifies price-determining characteristics and
uses hedonic regression analysis to attach a value
to these
› Parameter estimates are then used to adjust new
price
› To be applied to:
- Motor vehicles
- Cell phone instruments
- Certain high-tech items (computers, DVD
players etc)
• Will also introduce quantity adjustments
Methodological improvements
• Seasonal fruit
› Currently exclude strong seasonal fruit
› Will switch to the ‘seasonal basket’ method. One
weight for all seasonal fruit. Predetermined month
seasonal baskets based on sales data.
Methodological improvements
• Used vehicles
› Current method:
-
weight = sales;
annual sample refresh,
no linking
› Weights to follow national accounts method
› Used vehicle sales typically between households
› Weight = Value of sales x dealer margin
› Sample still to be refreshed annually
› Link substitute models with quality adjustment
Key timelines
• November 2012
– Publish final basket and weights CPI and PPI
• February 2013
– Publish reweighted, rebased CPI
-- Publish new PPI and UVIs
Thank you