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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. Questions/Thoughts?