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

Producer Price Index Manual
1.359 As well as releasing time series of index
numbers for a range of industries or commodities or
stages, and aggregate measures (for example, all
groups), user analysis can be enhanced by the release
of time series of percentage changes, as well
as tables presenting the contribution that individual
components have made to aggregate index point
changes. This latter presentation is particularly important
to help gain an understanding of the sources
of inflationary pressure.
1.360 Different tabular views of the data can be
provided. For example, classification by:
• Source—imported or domestically produced;
• Economic destination—consumer or capital
goods; and
• Industry and/or commodity.
1.361 Some form of analysis of the main movements
and, ideally, the causes of those movements,
should be provided. These will be based on the percentage
change and point-contribution tables described
above.
1.362 In addition to the summary tables, analytical
tables, and detailed tables, explanatory notes
should outline the conceptual basis of the index including
the objectives, scope, coverage, pricing basis,
sampling techniques, and data sources. The
weighting patterns should also be published. Any
caveats or limitations on the data should be included
to caution users.
1.363 As well as release in hard copy form, electronic
delivery and access through the Internet website
of the national statistical agency should form
part of the overall dissemination strategy.
1.364 In terms of timeliness of release, there will
be a trade-off between accuracy and timeliness. In
general, the faster the release, the lower the accuracy
of the data, and hence its reliability, as the
need for revisions increases. Price index users—
whether they be public policy economists, market
analysts, or business people adjusting contract
payments—place a high value on certainty (that is
the nonrevisability of price indices). Accordingly,
some compromise in the timeliness of release will
probably need to be made in order to achieve a high
degree of certainty and user confidence.
1.365 Policies need to be developed in relation
to:
• Security of data through the uses of a strict embargo
policy;
• Publication selling prices and electronic access
charges based on relevant principle—for example,
commercial rates, cost recovery, or rationing
of demand; and
• Community access to public interest information—for
example, through free provision to
public libraries.
1.366 Ongoing consultation with users should be
maintained to ensure that the indices, and the way
they are presented, remain relevant. The establishment
of a formal user group, or advisory group,
should be considered.
Step 9. Maintaining samples of businesses
and product specifications
1.367 As noted in Section R above, some of the
necessary prerequisites for the production of an accurate
price index are to incorporate prices which,
over time, relate to:
• Product specifications that are representative
indicators of price change;
• Constant quality products with fixed specifications;
and
• Actual market transactions inclusive of all discounts,
rebates, etc.
1.368 Step 5 above expands on these principles
and outlines the methodology for selecting the sample
of product specifications from a business at initialization,
preferably by personal visit.
1.369 Given the dynamics of many marketplaces
in terms of changing product lines and marketing
strategies, it is important that procedures are put in
place to ensure that the product samples remain representative
and have fixed specifications, and that
the prices reported incorporate all discounting.
1.370 Further, if explicit internal weighting is
used in the lower-level index aggregation, these
weights need to be monitored and updated as necessary,
on a component-by-component basis.
1.371 Ideally, a rolling program of regular interviews
of the sampled businesses would be established
to undertake these reviews on a fairly frequent
basis. Costs may prohibit regular visits to all
of the businesses, so it may be necessary to priori-
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