Workshop on Price Index Compilation Issues February 23-27, 2015 Price Specifications Gefinor Rotana Hotel, Beirut, Lebanon

2 Price Specifications What are price specifications and why are they important What do price specifications correspond to? What is included in a price specification? Who develops price specifications Tight versus loose specifications What problems arise if price specifications are inadequate Specifications may need to be revised if Initiation phase for the PPI Some examples! Further discussion February 23-27, 2015METAC and IMF Statistics Dept.

What are price specifications and why are they important Descriptions of representative transactions that include all pertinent information such that they facilitate comparison of prices on a like-to-like basis from one period to the next allow for the unique identification of the variety priced such that the same variety can be priced even when the price collector changes quality change can be identified and adjusted for February 23-27, 2015METAC and IMF Statistics Dept. 3

Collection of price specifications is The first phase of price collection February 23-27, 2015METAC and IMF Statistics Dept. 4

What do price specifications correspond to CPI – in many cases it is difficult to observe actual transaction prices for items Marked prices (but what about bargaining?) PPI – description of transactions (> than products) February 23-27, 2015METAC and IMF Statistics Dept. 5

What is included in a price specification? For CPI? Goods Services For PPI? February 23-27, 2015METAC and IMF Statistics Dept. 6

Who develops price specifications? Roles Data collector Supervisor NSO staff Respondent (PPI) Final responsibility for developing and maintaining price specifications lies with the compiler!! February 23-27, 2015METAC and IMF Statistics Dept. 7

Tight versus loose specifications? One size fits all?? Requires judgment on a case by case basis Tight specifications leave less discretion to the price collector necessary for heterogeneous items facilitate calculation of meaningful average prices (how important is this?) Identifying outliers Comparisons of price levels between regions etc. But can create problems February 23-27, 2015METAC and IMF Statistics Dept. 8

CEF11.06_L6: 9 What problems arise if price specifications are inadequate? February 23-27, 2015METAC and IMF Statistics Dept.

Specifications may need to be revised if There are a large number of missing quotations A large number of substitutions Wide variation in the distribution of collected price levels Prolonged no price change? February 23-27, 2015METAC and IMF Statistics Dept. 10

Initiation phase for the PPI Separate to and preceding regular price collection What types of data should be collected and why? Descriptions and weights How do we prepare for initiation? Which data collection method is best? What are the challenges? February 23-27, 2015METAC and IMF Statistics Dept. 11

Some examples! Structured product descriptions (SPDs) from the ICP – replicate this approach Examples of Straightforward Heterogeneous Clothing Market Bad February 23-27, 2015METAC and IMF Statistics Dept. 12

CEF11.06_L6: 13 Further discussion August 27-31, 2012JSA SNA-ICP Program