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| I. Analytical Framework, Concepts, Definitions, and Classifications |
2.1.1 Concepts and definitions Statistical concept Output Price Indices or Producer Price Indices are business cycle indicators showing the monthly development of transaction prices of economic activities. They can be an early indicator of inflationary pressures in the economy, but also record the evolution of prices over longer periods of time. The total output price index is broken down into domestic output price index and non-domestic output price index Definition of indicators The domestic output price index for an economic activity measures the average price development of all goods and related services resulting from that activity and sold on the domestic market. The non-domestic price index shows the average price development (converted to local currency) of all goods and related services resulting from that activity and sold outside of the domestic market. When combined, these two indices show the average price development of all goods and related services resulting from an activity. It is essential that all price-determining characteristics of the products are taken into account, including quantity of units sold, transport provided, rebates, service conditions, guarantee conditions and destination. The specification must be such that in subsequent reference periods, the observation unit is able uniquely to identify the product and to provide the appropriate price per unit. The following rules apply for the definition of prices: · The appropriate price is the basic price that excludes VAT and similar deductible taxes directly linked to turnover as well as all duties and taxes on the goods and services invoiced by the unit, whereas subsidies on products received by the producer, if there are any, should be added. · If transport costs are included, this should be part of the product specification, · In order to show the true development of price movements, it should be an actual transaction price, and not a list price, · The output price index should take into account quality changes in products, · The price collected in period t should refer to orders booked during period t (moment of order), not the moment when the commodities leave the factory gates, · For output prices of the non-domestic market, the price should be calculated at national frontiers, FOB (free on board). The index should in principle reflect the average price during the reference period. In practice the information actually collected may refer to a particular day in the middle of the reference period that should be determined as a representative figure for the reference period. For products with a significant impact on the national economy that are known to have, at least occasionally, a volatile price development, it is important that the index does indeed reflect average prices. The indices of domestic and non-domestic prices require separate output price indices to be compiled according to the destination of the product. The destination is determined by the residency of the third party that has ordered or purchased the product. The domestic market is defined as third parties resident in the same national territory as the observation unit. The euro area countries are required to provide non-domestic output prices further sub-divided into output prices for products despatched to euro area countries and all other output prices. 2.3.1 Classification/sectorization Classification system and conformity with official standards NACE Rev.1.1 (Statistical classification of economic activities in the European Community, Eurostat, 2002) is used for classification of the activities. |
| II. Scope of the data |
2.2.1 Scope Scope of the data Geographical coverage Data are published for the euro-area, the European Union and for each country separately, if data are available. Statistical units The STS-R states that observation unit is the kind-of activity-unit (KAU). The KAU groups all the parts of an enterprise contributing to the performance of an activity at class level (four digits) of NACE Rev. 1.1. In practice prices are observed for individual products, and the resulting product indices are combined to produce price indices at an elementary level of activity (for example 4-digit level of NACE). From this elementary level indices are aggregated to produce indices for higher levels of activity, and the weights used for such an aggregation should ideally be based on data for the KAU. Statistical population According to the Short Term Statistics regulation (Council Regulation N° 1165/98 of 19 May 1998) (hereafter referred to as the STS-R), all Member States are obliged to transmit data at 2-digit level for Mining and quarrying (Section C), Manufacturing (Section D), and Electricity, gas and water supply (Section E) of NACE Rev. 1.1. Data for Section D should also be transmitted at 3-digit and 4-digit level by those Member States that have a total value added in Section D (Manufacturing) that represents more than 4% of the European Union total. Other data at 3-digit and 4-digit levels that are not requested may also be transmitted for individual countries, if they are considered to be of sufficient quality. The following activities are disseminated in Euro-IND: · Total industry (mining, quarrying, manufacturing, electricity, gas and water supply) |
| III. Accounting Conventions |
2.4.2 Recording basis Reference period Calendar month. Recording of transactions Data are to be transmitted to Eurostat as an index according STS-R requirements. |
| IV. Nature of the Basic Data Sources |
3.1.1 Source data collection programs Data sources used Data collection is carried out by the Member States. The Member States transmit gross data to Eurostat. The reference period is the calendar month. Data should be transmitted to Eurostat no later than 1 month and 5 days after the end of the reference period. This deadline may, however, be extended by up to 15 calendar days for those Member States whose value added in Sections C, D and E of NACE Rev. 1in a given base year represents less than 3 % of the EU total or for data on the NACE group and class levels. Also, the deadline may be up to 15 calendar days longer for data on NACE group and class levels Data are presented in the form of Indices and Growth rates. Type of survey The monthly monitoring of changes in prices of products sold by domestic producers is done by means of a statistical survey of the producers in the activity in question. Regular collection of prices data normally flows from a sample of units and a sample of their products. The basic sampling method used varies between national statistical authorities. It may involve a two-stage sampling process of observations units and products. Alternatively, if an appropriate frame is available a single sample is made of "pairs of observation units and products". The sampling frame used may vary depending on the market under study (domestic or non-domestic). On the domestic market, the sample of enterprises is normally drawn from the Statistical Business Register. A probabilistic method (usually proportional to size) or reasoned selection is used to ensure a sufficient coverage. Once an observation unit has been selected a qualified field officer may visit the firm to: • gain some understanding of the enterprise and its prices policy; For each of the product groups of the observation unit, a choice must be made of the products (or transactions) which are most representative of changes in the observation unit's prices. In some cases an estimate of their level of representativeness may be made and this subsequently reflected in an intra-enterprise weight used for the basic index of the product being monitored. The use of a detailed level of the product classification to select the products ensures greater accuracy of the index at CPA 4-digit level. In most countries, product data is gathered at CPA 6-digit level or even finer. Every product selected for monthly monitoring needs to be described in great accuracy, together with its price and all characteristics of the transaction. Techniques of data collection Detailed methodological information about Member States practice is available here. |
| V. Compilation Practices |
3.3.2 Other statistical procedures Compilation of European aggregates For the calculation of the euro-area and the EU series, Eurostat aggregates data from Member States and estimates the last missing observations with autoregressive integrated moving average models, hereafter referred as ARIMA models. More information on ARIMA models can be found at http://www.bde.es/servicio/software/econome.htm). The weight for aggregating this index between The European aggregation is successive, meaning that the starting date of the aggregate equals the point when the 60% threshold of the total weight is reached. No backcasting of the national series is performed; therefore the final European aggregate is a compilation of a number of countries that increases with time. To avoid potential level shifts in the aggregate each time a new national series is included in the aggregate, the level shifts are corrected. The correction influences the level of the aggregate but respects the growth rate of the corrected segment. Following the corrections of the level shifts, the base year values may have been altered. This is only the case if a level shift was treated after 2000. Therefore, subsequently the whole series will be rescaled, in order to average 100 in the base year. Adjustments The Member States are required to transmit Industrial Output Indices in an unadjusted form. Treatment of missing values: ARIMA. Base period Indices in STS are expressed with reference to a base value and this base value is representative for a base year. For a monthly series the base value is the monthly average during the base year and for a quarterly series the base value is the quarterly average during the base year. By convention the index value of 100 is assigned to the base value. General criteria for suitable base years are that they should be a "normal" or "average" year, which has not shown very strong special influences. However, so that international data comparison and aggregation of national indices are not made more difficult through different nationally specified base years, the STS-R has specified that base years should be updated every 5 years and that the base years should be those ending in a "0" or a "5". The STS-R requires that rebasing should take place within three years from the end of the base year. The current base year is 2000. Seasonal Adjustment Eurostat approach in seasonal adjustments corresponds to the direct seasonal adjustment method. 3.4.1 Validation of intermediate results Data validation of statistical data Data received from Member States and EU data are validated using logical validation rules and the quality of data is regularly checked. |
| VI. Other Aspects |
| Footnotes | ||
| Last posted: Date IMF staff last posted an update to these metadata on the DSBB. | ||
| Last certified: Date subscriber last officially certified the accuracy of these metadata. | ||
| Last updated: Date subscriber last submitted an update of these metadata to the IMF. | ||
