Updating Project Producer Price Index (PPI) OECD Meeting Santiago, 14 July 2009

Project Goal The main goal of the project is to have the updated information about the Producer Price Index (PPI) according to the recomendations and standards of the OECD, to get consistency with the System of National Accounts.

Study of Manuals and Internationa l Methodologi es Building frameworks and the Pre- Basket Monthly Information gathering Publication of new indicators -International Manuals of Producer Price Indices FMI. -International Methodologies Countries with high standars of statisticals. -Building frameworks organized by destiny and economical activities. -Determining of pre-basket -Implement the survey of register. -Definition of the basket -Design of samples for the monthly implementation -Design of forms and instructions. - Monthly Gathering. -Establish the base year, Study of results and -Publication of the indicators Schedule of Activities

II. PRODUCER PRICE INDEX PRODUCER Costs of production + Producer Profits + Subsidies – Taxes Intermediate Goods Capital Goods Final Goods EXPORTS Basic Price PPI DOMESTIC MARKET Intermediaries Final Consumer Basic Price FOB

Like others índices, the PPI will be computed from a basket that will have a tree structure. VBP (SCN) ISIC.CL 4 Díg. CCP.CL 7 Díg Σ p * q Basket Category Division Group Class Subclass Product 1Product 2 Variety 1 Subvariety Establishment 2 Subvariety Establishment 1 Variety 2 Weights Classifiers Example Agriculture, breeding, hunting and silviculture Agriculture, breeding, hunting and activities of linked services Crops in general, cultivation of market products horticulture Cultivation of fruits, nuts, plants whose leaves are used for beverages and spices Other fresh fruits n.p.c (exclude fruits andf vegetables) Apples Red Apples

THE PPI INVOLVES THE FOLLOWING SECTORS OF THE NATIONAL ECONOMY: 1.Agriculture 2.Fishing (*) 3.Mining (*) 4.Industry 5.EGA 6.Construction Domestic MarketExports ▲▲ ▲▲ ▲▲ ▲▲ ▲ ▲ Economic Sectors (*) Includes industrial sectors

Each sector will have their representative basket and will be added to the final construction of the according index (domestic market or exports) Category Division Group Class Sub-Class Product Variety Price Index Domestic Market Sector A Price Index Exports Sector A Category Division Group Class Sub-Class Product Variety Publication

New Indicator PPI Without copper PPI Domestic Market PPI Exports Weights Consistent in aggregate levels with National Accounts VBP Sales (p*q) structural Classifiers Branches of Activities  ISIC.cl Products  CPC.cl Branches of activities  ISIC.3 Products  CPC.1 and own PriceBasic price Basic price and in some cases producer price. PPI Summary Basket Formation Two Indices per destiny: Domestic Market - Exports Unique Basket to domestic market and exports Base PeriodYear 2009 = 100April 2003 = 100 ScopeUpdated PPICurrent PPI

Topics to be discussed at the next Technical Comitee a)Aggregation model b)Selection criteria for basket c)Imputation model d)Treatment of seasonality e)Base Temporality f)Quality Adjusts g)Splice

Publication new baskets PPI Oct - Dic st Publication New PPI Annual Base 2009 February 2010 IV. DISPLAY OF THE INDICATORS

PPI Improvement Program Base of Indices: Monthly Information Sources: Producers and wholesalers, producer associations Disaggregations: Own Base of Indices : Annual Information Sources: Producers, wholesalers (just for purchase prices) producer associations Clasificator: CCP.cl (based on CCP rev.1) Planned Done Formation of the Basket: Unique basket for Domestic Market and Exports Formation of the Basket : Different basket for Domestic Market and Exports Done

PPI Improvement Program Updating time of variety: Not defined Transparency: Poorly published methodology Updating time of variety: 2 months Transparency: Wide published methodology, methodological notes Planned Last level with weight: Variety Done Last level with weight: Product PPI without copper: No measure PPI without copper : Included Planned

PPI Improvement Program EGAS Sector: Just the distribution in Electricity EGAS Sector : Generation and distribution in Electricity In Process Quality Adjustments: Does not Exist Quality Adjustments: overlaps In Process Customized form for enterprises : Only information on prices and product characteristics In Process Customized form for enterprises: Prices information, product features, changes and replacements