International price comparison: documentation of statistics

The international price comparison is the annual statistics on the price levels and the price levels converted gross domestic product (GDP) of the EU and EFTA countries, compiled under the leadership of Eurostat. Statistics Finland collects national data for this survey, the main objective of which is to produce purchasing power parities (PPPs). The purpose of purchasing power parities is to enable real comparisons of the volumes of GDP between the participating countries.

Price level comparisons examine the prices of similar types of commodities in different countries. For private consumption, the weight structure of the commodity basket is constructed according to household consumption. Given the different consumption patterns in different countries, the goods and services to be included in the comparison from each country are selected in cooperation between the national statistical offices, Eurostat and the OECD. The price data on private consumption are collected by product group over a period of three years.

The objective of international price comparing is to produce purchasing power parities. A purchasing power parity is an exchange rate with which the prices of the commodity baskets in two countries are made identical by converting them into one, common currency. Purchasing power parity is used to measure the value of the national economy's money on the basis of how much goods and services can be bought with its currency. This gives a more accurate picture of the output of the national economy per capita than simply by converting the value of gross domestic product or gross national income (usually) into euros or US dollars.

The European Union finances participating countries in the production of PPP basic information. 

PPP basic information:
1. GDP expenditure weights
2. Actual and imputed rentals
3. Compensation of employees
4. Temporal adjustment factors
5. Prices of consumer goods and services and related representativity indicators
6. Prices of equipment goods
7. Prices of construction projects
8. Spatial adjustment factors
 

The basic information listed in the PPP Regulation (Regulation (EC) No 1445/2007) must be obtained either from statistical units as defined in Council Regulation (EEC) No 696/93 or from other sources which yield data meeting the quality requirements. Each Member State must notify the type of the statistical unit or source to the Commission when transmitting the data. For private consumption, there is a special ECP business type classification for this purpose. 

Regulation (EEC) No 696/93 lays down a list of eight statistical units:

1.    Enterprise – a unit producing goods or services which has a certain degree of autonomy in decision making, especially in the allocation of its current resources, e.g. a small business.
2.    Institutional unit – a unit with decision-making autonomy in respect of its principal function and which keeps a complete set of accounts, e.g. companies or cooperatives, partnerships, public enterprises or non-profit institutions recognised as independent legal entities.
3.    Enterprise group – an association of enterprises bound by legal and/or financial links. It can have more than one decision-making centre, especially for policy on production, sales and profits, and may centralise certain aspects of financial management and taxation.
4.    Kind-of-activity unit (KAU) – A KAU groups all the parts of an enterprise contributing to the performance of an activity at class level (four digits) of NACE* Rev. 1, and corresponds to one or more operational subdivisions of the enterprise.
5.    Unit of homogeneous production (UHP) – a unit characterised by a single activity which is identified by its homogeneous inputs, production process and outputs. The products which constitute the inputs and outputs are themselves distinguished by their physical characteristics, the extent to which they have been processed and the production technique used, by reference to a product classification. The unit of homogeneous production may correspond to an institutional unit or part of a unit; on the other hand, it can never belong to two different institutional units.
6.    Local unit – an enterprise or part of an enterprise (e.g. a workshop, factory, warehouse, office or mine) situated in a geographically identified place. At or from this place, economic activity is carried out for which – with certain exceptions – one or more persons work (even if only part-time) for one and the same enterprise.
7.    Local kind-of-activity unit (local KAU) – the part of a KAU which corresponds to a local unit.
8.    Local unit of homogeneous production (local UHP) – the part of a UHP which corresponds to a local unit.
The statistical units used by the Member States to provide data or to cooperate in data collection must allow the monitoring of the prices actually charged, and must give honest and complete information at the time it is requested.

Eurostat calculates PPP results for each calendar year. The results published by Eurostat at an aggregated level for each Member State must include at least the following:

•    PPPs at the level of GDP,
•    PPPs for private household consumption expenditure and actual individual consumption,
•    Price level indices relative to the Community average, and
•    GDP, private household consumption expenditure and actual individual consumption and respective per capita figures in PPS.

If results are calculated for a wider group of countries, the PPPs of the Member States must nevertheless be preserved (the principle of fixity). Published final PPPs are generally not revised. However, in the event of certain mistakes, corrected results must be published. Exceptional general revisions must be carried out if, due to changes to the concepts underlying ESA 2010 that affect PPP results, the volume index of GDP for any Member State changes by more than one percentage point.
 

Eurostat calculates PPPs and price level indices for each calendar year.

Eurostat publishes the final annual results no later than 36 months after the end of the reference year. The data published are based on data available to Eurostat no later than three months before the date of publication These provisions do not affect the right of the Commission (Eurostat) to publish preliminary data earlier than 36 months after the end of the reference year.

Currently, Eurostat publishes the final PPP results for the reference year (t) within 36 months (t+36), preliminary PPP results for the reference year within 12 months (t+12), and forecasts for the GDP volume index for the reference year within five months (t+5). In addition, calculations are also made 24 months after the reference year (t+24). 
 

Preliminary PPP results are published within t+12 months.
Revised preliminary PPP results are published within t+24 months.
Final PPP results are published within t+36 months.
First preliminary results, based on extrapolations from year t-1 and on the new data for year t that are available at that time (nowcast) after t+6 months.  

 

Finland participates in the European Comparison Programme (ECP) coordinated by Eurostat. The country groups included in the analysis are the 27 EU Member States, six candidate countries (North Macedonia, Montenegro, Turkey, Serbia, Albania as well as Bosnia and Herzegovina) and three EFTA countries (Iceland, Norway and Switzerland). In each country, the national statistical office is responsible for the national data collection. 

Eurostat has the mandate to submit the European data for use by the International Comparison Program (ICP).
There are 176 countries participating in the ICP.
 

The international price comparison covers all sections of the national economy.

Eurostat publishes in December:
Preliminary PPP results are published within t+12 months.
Revised preliminary PPP results are published within t+24 months.
Final PPP results are published within t+36 months. 

Nowcasts are published in June: 
Forecasts for the GDP volume index for the reference year are published within t+6 months.

Eurostat and Statistics Finland both publish price level indices for private consumption in June.

Comparable and representative items mean those which are, or are considered to be, in terms of relative total expenditure within a basic heading, among the most important items purchased in national markets. Eurostat’s PPP programme aims to ensure both comparability and representativeness at each stage of the price survey process.

Delays in the transmission of basic information to Eurostat:
GDP expenditure weights: Nine months
Actual and imputed rentals: Eight months
Compensation of employees: Six months
Temporal adjustment factors: Three months
Prices of consumer goods and services and related representativity indicators:  One month
Prices of equipment goods: One month
Prices of construction projects: One month

Eurostat’s release schedule:
Preliminary PPP results are published within t+12 months.
Revised preliminary PPP results are published within t+24 months.
Final PPP results are published within t+36 months. 
Forecasts for the GDP volume index for the reference year are published within t+6 months.

The time lag for the publication concerning private consumption is t+6 months.

 

No delays normally.

                              

The international price comparison is a multilateral comparison, in which the classifications and practices are the same in all the participating countries.

The basket of items changes over time. It is not therefore recommended to use PPP results to monitor long-term price changes.

Recommended uses:
1.    To make spatial volume comparisons of GDP as snapshots.
2.    To group countries by their volume index.
3.    To group countries by their comparative price levels.

Not recommended uses:
1.    As precise measures to establish strict rankings of countries by their volume index.
2.    As a means of constructing national growth rates.
3.    As measures to generate output and productivity comparisons by industry.
4.    As measures to undertake price level comparisons at low levels of aggregation.
5.    As indicators of the undervaluation or overvaluation of currencies.
 

The international price comparison describes the price level of a single country in relation to other countries.

The consumer price index describes the price development of goods and services purchased by households in Finland.
The consumer price index is used as a general measure of inflation.

 

The shares of expenditure components in current-price GDP, i.e. the final expenditure weights, must be consistent with the corresponding prices.

1. Final GDP expenditure weights: these weights must be consistent with the lowest level of available aggregates from national accounts.
2. Actual and imputed rents: rent statistics and dwelling stock data in the quantity-based approach.
3. Compensation of employees: wages and salaries statistics
4. Temporal adjustment factors: consumer price index database
5. Prices of consumer goods and services, and related representativity indicators: six different price surveys*, see below
6. Prices of equipment goods: data collection on prices of machinery and equipment every two years
7. Prices of construction projects: data collection on prices of construction projects is carried out annually by an external expert
8. Spatial adjustment factors: consumer price index database and data from the Social Insurance Institution of Finland (Kela).

*) The price data on private consumption are collected by product group in the six surveys carried out over a period of three years:
1. Food, drinks and tobacco
2. Personal appearance
3. House and garden
4. Transport, restaurants and hotels
5. Services
6. Furniture and health.

Prices are collected from retail outlets in Helsinki, Vantaa and Espoo. The outlets vary according to the survey (1–6). A representative sample of outlets of different sizes and types is included. Depending on the survey, a total of around 2,000 to 5,000 price observations are collected, i.e. around 4,000 to 10,000 prices per year. Statistics Finland’s statistical interviewers collect the prices either by visiting the stores or by telephone in connection with the collection of prices for services, for example. In addition, some prices are collected by email. Online collection has become a common practice. Scanner data have also been included in the international price comparison; the use will increase in coming years. 

Prices are collected from retail outlets in Helsinki, Vantaa and Espoo. The outlets vary, depending on the survey (i.e. the six categories of price surveys). A representative sample of outlets of different sizes and types is included.

Depending on the survey, a total of around 2,000 to 5,000 price observations are collected, i.e. around 4,000 to 10,000 prices per year. Statistics Finland’s statistical interviewers collect the prices either by visiting the stores or by telephone in connection with the collection of prices for services, for example. In addition, some prices are collected by email. The share of prices collected from the internet has been growing over the years. 

Scanner data have also been included in the international price comparison. The use will increase in coming years. Price data are also available from the data resources of the consumer price index.
 

GDP expenditure weights: annually
Actual and imputed rentals: annually
Compensation of employees: annually
Temporal adjustment factors: annually
Prices of consumer goods and services and related representativity indicators: two price surveys a year
Prices of equipment goods: every two years
Prices of construction projects: annually
Spatial adjustment factors: every six years according to the PPP Regulation; in practice, annually.

 

1. Intra-country validation, i.e. validation of data before submitting the data to Eurostat.
2. Inter-country validation, i.e. validation of data that takes place after combining the data of all participating countries.
 

Before transmitting the data to the Commission (Eurostat), each Member State must carry out a review of data validity based on:
1.     The maximum and minimum prices
2.     The average price and coefficient of variation
3.     The number of priced items per basic heading
4.     The number of priced representative items per basic heading and
5.     The number of prices observed per item.
 

Statistics Finland

Social statistics

The compilation of statistics is guided by the Statistics Act. The Statistics Act contains provisions on collection of data, processing of data and the obligation to provide data. Besides the Statistics Act, the Data Protection Act and the Act on the Openness of Government Activities are applied to processing of data when producing statistics.

Statistics Finland compiles statistics in line with the EU’s regulations applicable to statistics, which steer the statistical agencies of all EU Member States.

Further information: Statistical legislation

Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination.

Commission Regulation (EU) 2015/1163 of 15 July 2015 implementing Regulation (EC) No 1445/2007 of the European Parliament and of the Council as regards the list of basic headings used for Purchasing Power Parities.

Commission Regulation (EU) No 193/2011 of 28 February 2011 implementing Regulation (EC) No 1445/2007 of the European Parliament and of the Council concerning the system of quality control used for Purchasing Power Parities.

In addition, the EU regulations concerning the Structural and Cohesion Funds are legally associated with the Purchasing Power Parities Programme. The Regulation adjusting the weightings applicable to the remuneration of officials of the European Communities also requires the calculation of the PPPs.

The data protection of data collected for statistical purposes is guaranteed in accordance with the requirements of the Statistics Act (280/2004), the Act on the Openness of Government Activities (621/1999), the EU's General Data Protection Regulation (EU) 2016/679 and the Data Protection Act (1050/2018). The data materials are protected at all stages of processing with the necessary physical and technical solutions. Statistics Finland has compiled detailed directions and instructions for confidential processing of the data. Employees have access only to the data essential for their duties. The premises where unit-level data are processed are not accessible to outsiders. Members of the personnel have signed a pledge of secrecy upon entering the service. Violation of data protection is punishable.

Further information: Data protection | Statistics Finland (stat.fi)

No data concerning an individual outlet are disclosed so that the outlet can be identified. The data are published as index-format statistics at product group level. Individual outlets or products cannot be identified on the basis of the data.

Statistics Finland publishes new statistical data at 8 am on weekdays in its web service. The release times of statistics are given in advance in the release calendar available in the web service. The data are public after they have been updated in the web service.

Further information: Publication principles for statistics at Statistics Finland 

PPP basic information and the minimum frequency of new data supply comprise and are provided as follows:

GDP expenditure weights: annually
Actual and imputed rentals: annually
Compensation of employees: annually
Temporal adjustment factors: annually
Prices of consumer goods and services and related representativity indicators:  twice a year
Prices of equipment goods: every second year
Prices of construction projects: annually
Spatial adjustment factors: every six years according to the PPP Regulation; however, in practice annually.

Statistical data are published as database tables in the StatFin database. The database is the primary publishing site of data, and new data are updated first there. When releasing statistical data, existing database tables can be updated with new data or completely new database tables can be published.

In addition to statistical data published in the StatFin database, a release on the key data is usually published in the web service. If the release contains data concerning several reference periods (e.g. monthly and annual data), a review bringing together these data is published in the web service. Database tables updated at the time of publication are listed both in the release and in the review. In some cases, statistical data can also be published as mere database releases in the StatFin database. No release or review is published in connection with these database releases.

Releases and database tables are published in three languages, in Finnish, Swedish and English. The language versions of releases may have more limited content than in Finnish.

Information about changes in the publication schedules of releases and database tables and about corrections are given as change releases in the web service.

Eurostat’s database and publications.
Statistics Finland’s release in June.

 

Revisions – i.e. improvements in the accuracy of statistical data already published – are a normal feature of statistical production and result in improved quality of statistics. The principle is that statistical data are based on the best available data and information concerning the statistical phenomenon. On the other hand, the revisions are communicated as transparently as possible in advance. Advance communication ensures that the users can prepare for the data revisions.

The reason why data in statistical releases become revised is often caused by the data becoming supplemented. Then the new, revised statistical figure is based on a wider information basis and describes the phenomenon more accurately than before.

Revisions of statistical data may also be caused by the calculation method used, such as annual benchmarking or updating of weight structures. Changes of base years and used classifications may also cause revisions to data.

Eurostat carries out an assessment visit to each participating country at least once every six years to ensure that the implementation of the requirements of the PPP Regulation meets the high quality standards.

Eurostat carried out an assessment visit to Statistics Finland in October 2015.
 

Quality management requires comprehensive guidance of activities. The quality management framework of the field of statistics is the European Statistics Code of Practice (CoP). The quality criteria of Official Statistics of Finland are also compatible with the European Statistics Code of Practice.

Further information: Quality management | Statistics Finland (stat.fi)

Statistics Finland conducts statistical audits to ensure the high quality of the statistics.
The international price comparison statistics were audited in the autumn of 2018.

Data are released to all users at the same time. Statistical data may only be handled at Statistics Finland and information on them may be given before release only by persons involved in the production of the statistics concerned or who need the data of the statistics concerned in their own work before the data are published.

Further information: Publication principles for statistics
Unless otherwise separately stated in connection with the product, data or service concerned, Statistics Finland is the producer of the data and the owner of the copyright. The terms of use for statistical data.