METHODOLOGIES OF COMPILING CONSUMER PRICE INDICES 2012 ILO Survey of country practices Sources and Methods: Labour Statistics, Volume 1 Preliminary results Prepared by Valentina Stoevska and Esther Namukasa ILO Department of Statistics Introduction The International Labour Organization s (ILO) Department of Statistics publishes the series Sources and Methods: Labour Statistics which contains information on the scope of the statistics, their definitions and the methods used by the national statistical services in establishing the statistics published. These Sources and Methods publications describe the methodologies of a range of labour statistics and, to date, ten such volumes have been produced. Volume 1 of Sources and Methods: Labour Statistics presents methodological information on national series on consumer price indices. The corresponding statistical series are available online in the ILO Department of Statistics statistical database LABORSTA (see http://laborsta.ilo.org/applv8/data/ssm1_new/e/ssm1.html). The purpose of the survey used to update this volume is twofold: (i) to provide basic information on the sources and methods used in each country in compiling the CPI published by the ILO, so as to enhance their usefulness for different purposes; and (ii) to indicate the differences between the national series with regard to their coverage, definitions, methods of measurement, methods of data collection, reference periods, etc. Volume 1 has been updated four times, the last time in 1992. The 2012 exercise has been done jointly with the FAO. This paper presents common characteristics of the national practices used in the collection of CPI across countries, and points out similarities and differences in the way countries estimate their CPIs. Method and structure of the questionnaire In order to compile Volume 3 of Sources and Methods: Labour Statistics, each ILO member state received a request to complete a methodological questionnaire with information about the most important features of the CPI compiled in their country. Close to 70 countries completed the methodological questionnaire and questionnaires of approximately 100 countries were completed by the ILO on the basis of information published on the respective websites of the National Statistical Offices (NSO) or the International Monetary Fund s (IMF) Special Data Dissemination Standard. The distribution my continent is as follows. - Asia 41 - Africa 43 - Europe 39 1
- America 33 - Oceania 13 The methodological questionnaire was designed to provide a synthesized picture of the country practices in estimating CPI, while at the same time, allowing for comparisons between the practices of how countries compile CPI. The questionnaire is divided into nine different sections. A. Identification B. Coverage C. Concepts, definitions, classifications and weights D. Sample design E. Data collection F. Computations G. Editing and validation procedures H. Dissemination I. Other information Each of these sections provides different questions with pre-defined answer options as well as space for additional comments to allow for a general overview of the commonly used approaches to estimate CPI in each country, region or territory. Results of the survey and analysis This section reviews the quantitative and qualitative results of the survey. The analysis is not an exhaustive list of all results of the methodological questionnaires on CPI; rather, it is a careful selection of the most important similarities, differences and interesting facts. It thus focuses primarily on the following key topics and areas: Periodicity of dissemination Out of 169 countries, only 17 disseminate the index quarterly and 1 country disseminates the all-items index quarterly with monthly periodicity for food CPI only. The rest of the countries disseminate the index with a monthly periodicity. Uses of CPI, % of countries Macroeconomic modelling and Computation of purchasing power Deflate household expenditures in Main inflation indicator used for Indexation of rents, contracts Indexation of wages, pensions Other uses 11% 39% 55% 64% 88% 96% 91% 0% 20% 40% 60% 80% 100% 2
Reference period for index and weights, % of countries 7% 34% Index base period corresponds to weights reference period 59% Index base period does not correspond to weights reference period Geographical coverage of weights, % of countries 9% 5% Nation-wide 6% 5% Urban areas Main cities/metropolitan areas/regions Main city (can include surrounding areas) 75% Other geographical coverage Population coverage, % of countries Resident households of nationals Resident households of foreigners Households of nationals located Temporary visitors 0% 20% 40% 60% 80% 100% Included Excluded 3
Excluded population groups, % of countries Institutional households High income households Low income households One-person households Excluded Included Other population groups 0% 20% 40% 60% 80% 100% Coverage of consumption expenditure, % of countries Expenditures abroad Social transfers in-kind of goods Other business-related Occupational expenditures Investment-related expenditures Gambling expenditure, gross of Licences and fees (e.g. driver s Life insurance premiums Non-life insurance premiums Interest payments (excluding Financial services (including fees Luxury goods Second hand goods purchased Purchase of gifts of goods and Major repairs, conversions and Housing maintenance, minor Mortgage interest Mortgage repayments Purchase of owner-occupied In-kind services received as gifts In-kind goods received as gifts Income in-kind receipts of services Income in-kind receipts of goods Food consumed away from home Services produced for own final Other goods produced for own Foods produced for own final Covered Not covered 0% 50% 100% 4
Weights include value of consumption from own production, % of countries 17% 46% Yes No 37% Weights include value of consumption from own production, % of countries 17% 46% Yes No 37% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 97% Household expenditure surveys Sources of weights, % of countries 13% 6% National accounts Consumer surveys 17% Other sources 5
Frequency of weights updates, % of countries 19% 38% 2% Annual Every two years Every 3-5 years Above 5 years 41% Price updating of weight reference period to the index reference period, % of countries 13% 26% 53% Yes No Not needed 8% Sampling method(s) used for the selection of localities, outlets and products, % of countries Localities Outlets Products 26% 29% 22% 19% 39% 11% Probabilty sampling Judgemental sampling 50% Other 45% 59% 6
Method of price collection, % of countries Personal data collection Mailed questionnaires Telephone interviews Scanner data Internet Official tariffs Other Yes No 0% 20% 40% 60% 80% 100% Second hand purchases, % of countries 19% 60% 21% Inlcuded Excluded Type of weights for seasonal food items, % of countries 18% 1% Fixed weights Variable weights Other methods or not relevant 81% 7
Method of imputation for out-of season periods (for those that do not use variable weights), % of countries 13% Carry forward the last observed price 40% 47% Impute the price by using price development of inseason products Other 100 80 60 40 20 0 Formula used for the calculation of elementry indices, no. of countries Aithmetic averageratio of arithmeticratio of geometric of price ratios (Carli index) mean prices (Dutot index) mean prices (Jevons index) Chained form Direct form Others Average prices calculated and disseminated, % of countries 5% 7% 18% 9% All items Selected items 13% Food products and energy Food items 51% 6% 4% calculated but not disseminated None 8