Producer Price Indices in Denmark Producer price index

Producer Price Indices in Denmark - Producer price index for commodities (PPI) March 20 th 2015

Agenda 1) Who are we 2) Purpose and application 3) Technical overview 4) Computation of the indices 5) Weights 6) Sampling frame 7) Sampling in practice 8) Monthly data collection 9) The monthly production proces 10) Data editing 11) Publication 2

1) Who are we The PPI section in Denmark: Head of Section: Janni Stavad - Quality work - Methodology Production Team: Connie Andersen - Monthly production Lone Laursen - Practical work 3

2) Purpose and application ”The producer price index for goods show the trend in the first business stage, i. e. business to business” “The indices are economic indicators and short term business indicators used as deflators in the National Account Statistics” The producer price indices have three end-users: - Deflators in National Account Producer price indices for commodities (PPI) - Eurostat ( STS Council Regulation ) - Publication ( the press og users ) 4

3) Technical overview PPI A-E Industries (NACE Rev. 2) Markets Sampling nomenclature Published indices • Domestic market and export • Imported commodities CN (The Combined Nomenclature) divided by groups of commodities • Domestic Supply • Total Danish production • Domestic market • Non-domestic market • Import Prices (approx. ) 6. 000 Companies (approx. ) 1. 400 Deflators 1. 050 Publication Monthly (15 th of the following month) 5

4) Computation of the indices PPI Prices divided into CN groups CN-groups → elementary aggregates Elementary indices → sub-indices Multiple levels of sub-indices Total index 6

4) Computation of the indices Construction of indices in Statistics Denmark: • Elementary aggregates: divided by products • Sub- and total indices: divided by products /divided by industries • • Elementary aggregates: Sub- and total indices: Geometric means Laspeyres type indices 7

5) Weights are provided by NA so index (deflators) can be provided to NA Price Index National Accounts PPI The weights, which are based on the supply and use tables from national accounts for the year 2010, are equal to the sum of the import- and production values for the domestic marked. The weights sum up to 100 within Total Danish production and import 8

6) Sampling frame The sampling frame for the producer price indices is based on turnover values from other in-house statistics Underlying data: • Production values from Industrial commodity statistics • Import and export values from International trade statistics • The business register 1. Selection of elementary aggregates from a complete list of commodity groups: • Elementary aggregates are choosen from the commodity groups that have the largest production values (70 percent) • Supplement with elementary aggregates that have smaller production values in order to reflect the entire population Sample Top-down sampling in order to cover as much turnover as possible Industry X 2. Selection of companies: • Prices are collected from companies with the largest turnover • Supplement with prices from smaller companies to reflect the population Sampling goal for PPI: • Cover as much HS turnover as possible 9

7) Sampling in practice Electronic questionnaires is the primary mode of sampling • The selection of sample products is left to the establishments • Statistics Denmark sends an electronic questionnaire with HS number and HS text to the selected firms. We ask the establishment to select the following: “For each product category please select some products (normally three), which are representative for the establishment and is expected to give a true picture of the development in prices. The product must not change quality too often. Please describe the products as precisely as possible to ensure, the price reporting covers the same products every time”. • No systematic sample rotation: • Few establishments with high turnover • Sample rotation is troublesome and expensive 10

Sampling in Practice: Selection of elementary aggregates Part of the complete list of commodity groups and the CN classification: Part of the complete list of commodity groups listed with the largest production value first: 230990: Other preparation of animal food 040690: Other cheese 11

Sampling in practice: Selection of companies 040690: Other Cheese 12

Sampling in practice: Selection of companies 230990: Other preparation of animal food 13

Sampling in practice: Industrues - commodity groups - prices 14

Sampling in practice: Industrues - commodity groups - prices 15

8) Monthly data Collection A standart email with a link to the electronic questionnaire is sent out to about 13001600 companies a few days before the 15 th of the month. www. virk. dk 16

9) The monthly production proces Days 1 10 30 20 1. Upload of questionnaire 40 30. New upload of questionnaire 2. E-mail for respondents 31. New e-mail for respondents 13. The first reminder 20. The second reminder 27. Closing current month 34. Index publication 17

9) The monthly production proces The production process over the year 18

10) Data editing Price changes • Accepted automatically by the production system (+/-15 percent) • Manual inspection Loading and evaluation of price data: Product changes • Quality changes? • Simple overlap (New item replaces old item in overlap period) Missing prices • from period t-1 (development = 0) • Imputation from similar good • Update sample Products not available • The companies will be asked to select a new item that can replace the old one When a current price collection period is close to the end, the production system creates several error lists. • The micro-level-list (contains all price changes) is the most important. 19

11) Publication of indices SPPI publishes the elementary indices (deflators) PPI publishes a total index and indices for sub-industries Statbank 20

12. Questions ? Thank you! Contact information: Janni Stavad + 45 39 17 34 41 sta@dst. dk 21