Price Statistics Compilation in 196 Economies: The Relevance for Policy Analysis
IMF Working Papers, July 26, 2019
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- Price Statistics Compilation in 196 Economies: The Relevance for Policy Analysis
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Bibliographic details
- Authors: Francien Berry, Brian Graf, Michael Stanger, Mari Ylä-Jarkko
- Published: July 26, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513508313.001
Purpose and scope
- The consumer price index (CPI) is used to gauge inflation, adjust wages, pensions, and social benefits.
- The producer prices index (PPI) is used for forecasting and deflating GDP estimates.
- Both indexes are used by the Fund, policymakers, and researchers for global, regional, and domestic surveillance.
- The paper evaluates index soundness by assessing four criteria: frequency of updating the weights, the index coverage, timeliness, and the use of international classifications.
- The study also discusses online and scanner data as frontier issues.
Methodology criteria assessed
- Frequency of updating the weights.
- Index coverage.
- Timeliness.
- Use of international classifications.
- Consideration of online and scanner data.
Key findings — CPI
- CPI is universally and frequently compiled.
- CPI is timely and fairly-well aligned with international standards.
- Weights used to compile the CPI are updated in only 45 percent of economies.
- CPI weights have national coverage in 76 percent of economies.
- Outdated weights negatively impact the reliability of the CPI for policy analysis.
- Frequently updated weights and well-represented coverage mitigate biases and help ensure the CPI properly measures price evolution.
Key findings — PPI
- PPIs are compiled by only 126 economies.
- PPIs are timely, but there is room for improvement.
- Only 36 percent of economies have updated PPI weights.
- Approximately 67 percent of economies maintain the recommended PPI coverage.
- Outdated PPI weights reduce the reliability of PPIs for policy analysis.
Implications for policy analysis
- Outdated weights and incomplete coverage can bias CPI and PPI measures and weaken their usefulness for inflation measurement, wage/pension adjustments, forecasting, and GDP deflation.
- Regularly updating weights and ensuring national-level coverage are central to improving index reliability for policy decisions.
- Adoption of international classifications and exploration of online and scanner data can strengthen price statistics compilation.
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- Working Paper