2.1.1 Concepts and definitions

Definition: Measure of changes in prices of a fixed set of selected significant products of constant quality produced by industrial producer units and destined for the domestic market (PPIi), index for non-domestic market (PPIx) and total index. The total index is calculated as weighted arithmetic mean of domestic and non-domestic subindices.

The price of domestic goods is agreed price between producer and first customer without VAT and excise duties. The price of non-domestic goods is agreed and invoiced price between the producer and foreign customer (without VAT) in EUR. Foreign currency prices are converted into SKK by actual exchange rate of the National Bank of Slovakia.

In general, metodological basis for the the PPI follows the European System of Accounts 1995 (ESA 1995) and Manual of PPI  Theory and Practice, 2004 (PPI Manual).

The concepts and definitions of the producer price index in the Slovak republic are based on The Short-term Statistics (STS) Council Regulations (The Council Regulation (EC) No. 1165/98 concerning short-term statistics, No. 1503/2006 concerning the difinitions of variebles and frequency of data compilation, No. 656/2007 concerning the definition of Main Indurstial Groupings (MIGS), No 472/2008 concerning  the first base year to be applied for time series in NACE Rev. 2 and, for time series prior to 2009 to be transmitted according to NACE Rev. 2, the level of detail, the form, the fifst reference period, and the reference period).

2.3.1 Classification/sectorization

Classification: For the producer price indices are used the following classifications:

• SK NACE Rev. 2 national industrial classification
• SK CPA 2008 - Classification of Products by Activity which is obligatory for EU member countries.
• PRODCOM classification used in the EU 
• PRODSLOV is  national classification developed on the base of the European standard of  PRODCOM 
• Main industrial groupings (MIGs) which are divided into five groups: 
  • Energy products 
  • Intermediate goods 
  • Capital goods 
  • Durable consumer goods 
  • Non-durable consumer goods
• PRODSLOV classification is preferable and it is the most detailed developed classification of  NACE, CPA and PRODCOM. 

Revised classifications of  SK NACE Rev. 2, CPA 2008 and PRODSLOV is applied in PPI published from 2009. Revised classifications represent a significant change compared with PPI time series disseminated until now.

2.2.1 Scope

Scope of the data

• Scope of the data: The index covers industrial products destined for the domestic, non-domestic market and total classified in division 05 – 39 of  the SK NACE Rev. 2, which correspond with sections B, C, D a E.
• Product coverage: The index includes approximately 7000 important products classified into divisions 05 – 39 of the SK NACE Rev. 2 (see also exceptions to coverage).
• Geographic coverage: Slovak Republic.

Exceptions to coverage

Product coverage: The index excludes the mining and adaptation of uranium and thorium ores, publishing, processing of nuclear fuel, weapons and ammunition, space craft, work of a production nature and repairs.

2.4.1 Valuation

Prices agreed between domestic producer and customer, excluding value added tax, excise duties and transportation costs and between producer and foreign purchaser without transport costs recalculated by actual exchange rate of National Bank of Slovakia to SKK in EUR. In case of products for domestic market defined by Law the prices are collected separately include excise duties (exclude VAT).

3.1.1 Source data collection programs

• Sources of weights: The weighting structure at the 4-digit SK NACE Rev. 2 level was determined on the base of 2010 sales according to industry statistics (covering establishments with 20 employees or more). Below this level, the weights were based on the results of a "One-time Survey for the Purpose of Selection of Representatives for Observation of Price Developments of Individual Producers" that involved 1200 respondents.
• Period of current index weights: Calendar year 2010.
• Frequency of weight updates: Every five years. The most recent update of the weighting system was realized in 2011, based on the 2010 weight.
• Establishment selection: The enterprises were selected purposely  based on turnover in 2010 from produce statistics data at the 4-digit  SK NACE Rev.2 level. When it was possible, two data suppliers were drawn for each heading. The commodities of the producer price indices were selected in co-operation with report unit. The object was that the commodity to be monitored would be as representative as possible and that it can be monitored as closely as possible.
• Product/transaction selection: Purposely. The selected establishments proposed lists of the important products for price observation. From these lists a selection was made using volume of sales as a criterion.
• Product/transaction specification: The products are specified by a 12 - digit numerical code, the ten first positions of which represent the PRODSLOV (national classification of PRODCOM). In addition, detailed descriptions of quality and delivery terms are made. Only significant and marketed products are surveyed.
• Sample sizes: Approximately 850 reporting units and 7000 prices are observed.
• Price collection methods: The reporting units send the completed questionnaires to the central processor by the 15th calendar day of the reference month. Most of the price data for the PPI are collected from enterprises by the questionnaire by mail, by fax or by e-mail.

3.1.3 Source data timeliness

Reported are prices for important  transactions invoiced between 10th and 12th calendar day, or for period between 1st and 9th calendar day if there was no important transaction between 10th and 12th calendar day.

3.3.1 Source data statistical techniques

• Computation of lowest level indices: At the lowest level of index aggregation (6 - digit SK CPA 2008 sub-categories) indices are computed through weighted arithmetical mean of individual prices indices of the sub-categories representatives. 
• Aggregation formula: Individual indices are aggregated to higher level indices using the modified Laspeyres formula and the 2010 weights.
• Aggregation structure: The price representative indices are aggregated from 6 - digit SK CPA 2008 sub-categories to the higher level. The domestic price indices are published by SK NACE Rev. 2  classification: groups (at the 3-digit level) and non-domestic and total price indices of digit SK NACE Rev. 2 divisions from 05 – 39 (at the 2-digit level), which are cumulated into subsections BA, CA to CM, DA and EA, sections B, C, D, E and total industry (B + C + D + E). The indices for some groups are not published due to the confidential character of the data.
• Alignment of value weights and base period: Weight reference period is the whole year of 2010, price reference period is December 2010. No adjustments were made to align the weight and the price reference periods. Except this there are also calculated PPI to the base average of year 2010 = 100.
• Linking of reweighted index to historical index:  In case of domestic price indices historical series are constructed at 4-digit SK NACE Rev. 2 class to the higher level. A double collection was undertaken in December 2011 to derive the linking coefficients through a comparison of the old list of products to the new list of products. This Coefficient reflects different development of every price index  of constituent levels of price indices at new and old weight pattern and serves to their continuous linking. The same method was used in implementation of revised classification of  SK NACE Rev. 2 in conversion backwards time series till 2000 at 4-digit level of classes where every conversion coeficient represents differences in development in formerly used classification NACE Rev. 1.1 and new classification SK NACE Rev. 2 (makro method).
• Reference period: Indices are computed and published with December 2010 = 100 and other derived bases (e.g. average of the year 2010 = 100, preceding month = 100, the same period of the preceding year = 100, temporary December 2005= 100).

3.3.2 Other statistical procedures

• Treatment of missing prices: If a price is unavailable during the collection month, the reporting unit does not send a "no change" report, in this case missing price is imputing on the base of price development (average growth - decline) from the nearest aggregation. In case when the price is missing a long time we ask for replace of representative or report unit.
• Selection of replacement items: A product with similar quality characteristics and sales conditions (that is, within the observed 6 - digit SK CPA 2008 sub-categories) is selected as a replacement. The products replacements are carried monthly. The replacement proposals are submitted by the reporting unit.
• Adjustments for quality differences: The report unit seeks to estimate as objectively as possible what part of the price difference between the new and the old product is due to price change and what part results from quality change. In case the ratio between price change and quality change in the price difference of the new and the old product cannot be found out, the price difference is adopted in the index system as a full price change, the index remains unchanged in that case. If the technical characteristics of the observed price representative change, the reporting unit submits an annex to the reporting form in which the characteristics of the old and new products are compared. A summary index of change is then computed which recapitulates the difference in utility of the two products. This index is used to adjust the observed price for quality change (at present it is used sporadically). We use occasionally overlap method.
• Introducing new products: Before weight revision, new products may be introduced by product replacements within the 6,5 and 4 - digit SK CPA 2008 and  SK NACE Rev. 2 sub-categories, categories and classes. The new products are introduced SK NACE Rev. 2 class keeps stabile of 4-digit level.
• Seasonal items: If the seasonal products are not available in observe month the previous month's price index is carried forward until the price not will be changed again.
• Seasonally adjusted indices: Published indices are not seasonally adjusted.

3.4.1 Validation of intermediate results

• Verification of prices: Monthly prices changes are compared with price changes for similar products and previous month's prices. All uncertain items are checked with the reporting unit over the phone or during personal visits by staff of the statistical office.
• Verification of processing: The processing system includes built-in relations checking and testing procedures. The logical relations in basic product configurations and tables to be published are also checked visually.

3.5.1 Revision studies and analyses

Since 2002 the domestic industrial PPI are published excluding taxes i.e. without VAT and excise duties.