Integrating the HICP and PPP programmes in the UK Pam Davies Consumer Prices Conference October 2009

What does the presentation cover? How can the user need for detailed prices best be met? Using the HICP? Using the PPP? Neither the HICP nor the PPP fully meets the user need Integrating the HICP and PPP to meet the user need

Overview of the HICP Temporal comparisons Goods and services for consumption in MS Usually large sample size Monthly frequency Although harmonised, allows for different consumption patterns Some limitations: ‘baskets’ in MSs may not match sufficiently well to allow meaningful comparisons between countries

Overview of the PPP Designed for spatial comparisons Prices obtained for wide range of items Uses ‘tight’ specifications Some limitations: Prices collected only once every three years Often only in capital cities May not be representative of consumption in individual MS

How can we meet the user need? Neither the HICPs nor the PPPs fully meet the user need Integrating the HICP and PPP would provide consistent set of temporal and spatial comparisons Several challenges to overcome Practical considerations Resource constraints

Where do we start? Modify the PPPs? Modify the HICPs? Designed for spatial comparisons But practical issues (three yearly, capital city only) mean difficult to achieve integration Modify the HICPs? Large scale collection could be supplemented Resource implications

UK plans Review HICP ‘basket - Extend ‘basket’ to include PPP consumption items Collect PPP items alongside HICP collection - Perhaps less frequently than monthly - Prices might not feed into HICP This would enable spatial comparisons to be made - Even if only relatively small subset of PPP items introduced

Questions/Thoughts?