Producer Price Indices in Denmark - Producer price index for commodities (PPI) March 20 th 2015

1)Who are we 2)Purpose and application 3)Technical overview 4)Computation of the indices 5)Weights 6)Sampling frame 7)Sampling in practice 8)Monthly data collection 9)The monthly production proces 10)Data editing 11)Publication Agenda 2

1) Who are we 3 The PPI section in Denmark: Janni Stavad -Quality work -Methodology Connie Andersen -Monthly production -Practical work Head of Section: Production Team: Lone Laursen

2) Purpose and application 4 ”The producer price index for goods show the trend in the first business stage, i.e. business to business” “The indices are economic indicators and short term business indicators used as deflators in the National Account Statistics” The producer price indices have three end-users: Producer price indices for commodities (PPI) - Deflators in National Account - Eurostat ( STS Council Regulation ) - Publication ( the press og users )

3) Technical overview 5 PPI Industries (NACE Rev. 2) A - E Markets Domestic market and export Imported commodities Sampling nomenclatureCN (The Combined Nomenclature) divided by groups of commodities Published indices Domestic Supply Total Danish production Domestic market Non-domestic market Import Prices (approx.)6.000 Companies (approx.)1.400 Deflators1.050 Publication Monthly (15th of the following month)

4) Computation of the indices 6 PricesPrices divided into CN groupsCN-groups → elementary aggregatesElementary indices Elementary indices → sub-indices Multiple levels of sub-indicesTotal index PPI

4) Computation of the indices 7 Construction of indices in Statistics Denmark: Elementary aggregates:divided by products Sub- and total indices:divided by products /divided by industries Elementary aggregates:Geometric means Sub- and total indices:Laspeyres type indices

5) Weights 8 Weights are provided by NA so index (deflators) can be provided to NA PPI The weights, which are based on the supply and use tables from national accounts for the year 2010, are equal to the sum of the import- and production values for the domestic marked. The weights sum up to 100 within Total Danish production and import Price Index National Accounts

6) Sampling frame 9 The sampling frame for the producer price indices is based on turnover values from other in-house statistics Underlying data: Production values from Industrial commodity statistics Import and export values from International trade statistics The business register Top-down sampling in order to cover as much turnover as possible 1. Selection of elementary aggregates from a complete list of commodity groups: Elementary aggregates are choosen from the commodity groups that have the largest production values (70 percent) Supplement with elementary aggregates that have smaller production values in order to reflect the entire population 2. Selection of companies: Prices are collected from companies with the largest turnover Supplement with prices from smaller companies to reflect the population Sampling goal for PPI: Cover as much HS turnover as possible Sample Industry X

7) Sampling in practice 10 The selection of sample products is left to the establishments Statistics Denmark sends an electronic questionnaire with HS number and HS text to the selected firms. We ask the establishment to select the following: “For each product category please select some products (normally three), which are representative for the establishment and is expected to give a true picture of the development in prices. The product must not change quality too often. Please describe the products as precisely as possible to ensure, the price reporting covers the same products every time”. No systematic sample rotation: Few establishments with high turnover Sample rotation is troublesome and expensive Electronic questionnaires is the primary mode of sampling

Sampling in Practice: Selection of elementary aggregates 11 Part of the complete list of commodity groups and the CN classification: Part of the complete list of commodity groups listed with the largest production value first: : Other cheese : Other preparation of animal food

Sampling in practice: Selection of companies : Other Cheese

Sampling in practice: Selection of companies : Other preparation of animal food

Sampling in practice: Industrues - commodity groups - prices 14

Sampling in practice: Industrues - commodity groups - prices 15

8) Monthly data Collection 16 A standart with a link to the electronic questionnaire is sent out to about companies a few days before the 15 th of the month.

9) The monthly production proces Days 1. Upload of questionnaire 2. for respondents 13. The first reminder 20. The second reminder 27. Closing current month 34. Index publication 30. New upload of questionnaire 31. New for respondents

9) The monthly production proces 18 The production process over the year

10) Data editing 19 Price changes Accepted automatically by the production system (+/-15 percent) Manual inspection Product changes Quality changes? Simple overlap (New item replaces old item in overlap period) Missing prices from period t-1 (development = 0) Imputation from similar good Update sample Products not available The companies will be asked to select a new item that can replace the old one Loading and evaluation of price data: When a current price collection period is close to the end, the production system creates several error lists. The micro-level-list (contains all price changes) is the most important.

11) Publication of indices 20 SPPI publishes the elementary indices (deflators) PPI publishes a total index and indices for sub-industries Statbank

12. Questions ? 21 Thank you! Contact information: Janni Stavad