Producer Price Index Manual: Theory and Practice ... - METAC

1. An Introduction to PPI Methodology
possible errors and outliers, and the verifying and
correction of the data. Effective monitoring and
quality control are needed to ensure the reliability
of the basic price data fed into the calculation of the
elementary prices indices on which the quality of
the overall index depends.
Q. Organization and Management
1.274 The collection of the price data is a complex
operation involving extensive work by a large
number of statistical office staff and respondents.
The whole process requires careful planning and
management to ensure that data collected conform
to the requirements laid down by the central office
with overall responsibility for the PPI. Appropriate
management procedures are described in Chapter
12 of the Manual.
1.275 Price collectors should be well trained to
ensure that they understand the importance of selecting
the right transactions for pricing on initiation
of the sample. Inevitably, price collectors are
bound to use their own discretion to a considerable
extent. As already explained, one issue of crucial
importance to the quality and reliability of a PPI is
how to deal with the slowly evolving set of products.
Products may disappear and have to be replaced
by others, but it may also be appropriate to
drop some products before they disappear if they
have become quite unrepresentative. Price collectors
and product analysts need appropriate training
and very clear instructions and documentation
about how to proceed. Clear instructions are also
needed to ensure that price collectors and respondents
report the correct prices when there are discounts,
special offers, or other exceptional circumstances.
1.276 The price data reported also have to be
subjected to careful checking and editing. Computers
using standard statistical control methods can
carry out many checks. It may also be useful to
send out auditors to verify the quality and accuracy
of reported price data. The various possible checks
and controls are explained in some detail in Chapter
12.
1.277 Improvements in information technology
should obviously be exploited to the fullest extent
possible. For example, collectors may use establishment
websites for price information; establishments
can use some form of electronic data transfer
to report their prices or use an Internet-based reporting
system set up by the statistical office.
R. Publication and Dissemination
1.278 As noted here and in Chapter 2, the PPI is
an extremely important statistic whose movements
can influence the central bank’s monetary policy,
affect stock markets, influence wage rates and contract
settlements, and so on. There must be public
confidence in its reliability and the competence and
integrity of those responsible for its compilation.
The methods used to compile it must therefore be
fully documented, transparent, and open to public
scrutiny. Many countries have an official PPI advisory
group consisting of both experts and users. Its
role is not just to advise the statistical office on
technical matters but also to promote public confidence
in the index.
1.279 Users of the index also attach great importance
to having the index published as soon as possible
after the end of the each month or quarter,
preferably within two or three weeks. On the other
hand, most users do not wish the index to be revised
once it has been published, and there can be some
trade-off between timeliness and the quality of the
index. For example, it would be possible to revise
the index subsequently—by calculating a Fisher index
when the requisite revenue data become available—without
impacting on the timeliness of the
current index.
1.280 Publication must be understood to mean
the dissemination of the results in any form. In addition
to publication in print, or hard copy, the results
should be released electronically and be available
through the Internet on the website of the statistical
office.
1.281 As explained in Chapter 13, good publication
policy goes beyond timeliness, confidence, and
transparency. The results must be made available to
all users, within both the public and the private sectors,
at the same time and according to a publication
schedule announced in advance. There should be no
discrimination among users in the timing of the release
of the results. The results must also not be
subject to governmental scrutiny as a condition for
their release, and the results must be seen to be free
from political or other pressures. There are many
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