Producer price indices: documentation of statistics
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Basic data of the statistics
Five different indices are produced under the producer price indices for manufacturing: Producer Price Index for Manufactured Products, Export Price Index, Import Price Index, Basic Price Index for Domestic Supply, and Basic Price Index for Domestic Supply, Including Taxes (formerly Wholesale Price Index).
Producer price indices are compiled on product basis. Producer price indices for manufactured products describe development in the prices of goods and services in primary and secondary production. The indices are product-based, so the main industry of the enterprises producing products and services is irrelevant. If a service enterprise also produces goods, its goods production is excluded from the scope of the description of the Producer Price Index for Services. On the other hand, an enterprise that mainly produces industrial goods may also produce other services than industrial services, in which case for these services, the enterprise belongs to the scope of the description of the Producer Price Index for Services.
Unit of measure
The data of the producer price indices are published as index point figures. In addition, change percentages calculated on the basis of indices are published.
Base period is year 2015 (2015=100).
The producer price indices for manufactured products are published monthly on the 24th day of the month following the statistical reference month or on the first working day following it. As an exception to this rule, the statistics for January is published on the 26th or on the first working day following it due to changes to the weight structure of the index, and the statistics for November is released on the last weekday preceding 24 December.
The Export Price Index covers categories A-E, that is, commodities ranging from agricultural products to water and waste management services.
The Import Price Index covers categories A-E, that is, commodities ranging from agricultural products to water and waste manage-ment services.
The Basic Price Index for Domestic Supply covers the commodities in industries A to F, from agricultural products to construction. The Basic Price Index for Domestic Supply, Including Taxes covers the commodities in industries A to F, from agricultural products to construction.
Frequency of dissemination
At times the chain index is also mentioned in such cases where the comparison period is retained fixed in comparisons within the year, but the comparison period and the weight structure of the index is changed whenever the year changes.
Accuracy, reliability and timeliness
- sampling error
- deficient product and enterprise frameworks
- quality changes in service products included in price collection
- substitution bias
Data revision - practice
Producer price indices use the Laspeyres index formula. Scientific literature on indices often refers to the substitution bias that Laspeyres’ index formula may create. The direction of the bias depends on the target of measurement. In the case of the producer price indices, substitution bias may arise because (when maximising their profits) enterprises react to changes in relative prices by changing their production volumes. For example, if the price of light fuel oil rises relative to petrol, an enterprise engaged in the oil industry can produce more light fuel oil. In such a case, an index calculated with the Laspeyres’ formula underestimates price development from the enterprises’ viewpoint. The significance of the substitution bias depends on the scale at which individual enterprises are able to redirect their production when relative prices change.
Bias caused by new products
Producer price indices may contain bias arising from the entry of new products or services on the market. When speaking of new products reference is often made to electrotechnical and electrical products or digital services whose production and sales can grow quite rapidly. The structural change is also fast in the service industry and new services are developed constantly. If the change is vigorous, the index may not describe sufficiently accurately the average development in the prices of the commodities produced in the economy.
Bias caused by quality change
The objective of producer price indices is to describe pure price development, which is why changes in the quality or characteristics of products must be taken into consideration in the index calculation. The problem of quality change is usually encountered either when a data supplier reports that a product included in the collection is no longer produced, imported or exported, or that changes have been made to an existing product. Changes in quality may cause error in the index as the defining of a pure price change can be difficult and, conversely, the proportion of a price change that is due to changed quality is difficult to estimate and eliminate from calculations. If, as a product changes, we assume that the entire price change is due to a change in the characteristics of the product, we may disregard genuine changes in price, whereby the index incorrectly does not change at all for the product in question. If, then again, we assume that the entire price change is due to a genuine change in price, we may disregard changed product characteristics and the index changes too much.
Comparability - geographical
Comparability - over time
The base year of the indices is 2015. The classification used in the releases is the CPA 2015 product classification instead of the previously used European industry standard classification system NACE. Publishing of data with base years 2010=100 and 2005=100, and in producer prices for manufactured goods also with base year 1949=100, will continue. Indices of base years 2010=100 and 2005=100, and in producer prices for manufactured goods also of base year 1949=100, will be calculated forward by chaining with the index of the latest base year, so starting from 2018 they will develop in the same way as the base year 2015=100 index.
In connection with changing the base year, the calculation method of the indices was also revised. Starting from 2019, producer price indices are annual chain-linked indices. In practice, the shift to the chain-linked index method means that the weight structure of the producer price indices is updated every year. The new weight structure takes effect starting from the index for January of each year. In addition to the weight structure, product categories and the enterprise sample can also be updated annually. The base year of the index remains unchanged (2015=100). The changes improve the quality of the index, because with their help, changes in production, exports and imports can be taken into account faster.
The chaining coefficients of old base year indices are presented in the Handbook for users.
Coherence - cross domain
Development in the prices of consumption goods and services at the end use stage is measured by the Consumer Price Index. For the time being price indices are not produced for wholesale goods or trade margins.
Coherence - sub-annual and annual statistics
Coherence -national accounts
Coherence - internal
Five different indices are produced under the producer price indices for manufacturing: producer price index for manufactured products, export price index, import price index, basic price index for domestic supply, and basic price index for domestic supply, including taxes (formerly wholesale price index). The producer price index for services, in turn, describes the price development 9 of services provided by enterprises to other enterprises and the public sector (Business to Business, BtoB), to households (Business to Consumers, BtoC) and to all end users (Business to All, BtoAll). All the above-mentioned indices measure price development slightly differently from each other because the price concepts used, and the industries covered vary by index.
The producer price indices for manufactured products and services are compiled with the same methods.
Source data and data collections
In producer price indices the sample is formed by first selecting the product sample (CPA product categories) after which the enterprise sample is formed for each CPA product category. Price data are collected from enterprises included in the sample from which the price index is calculated by weighting. This price index is considered to be descriptive of average development in the prices of all commodities included in the population.
The frames of CPA product categories for the producer price indices is built by using the data of the supply and use tables of national accounts, the statistics on industrial production and Finnish Customs' statistics on foreign trade. The frames contain the values of production produced in Finland, and exports and imports by product category. Transit exports are deducted from exports, so the figure that remains is the value of exports produced in Finland only. Transit exports are correspondingly deducted from imports so the figure that remains is the value of imports remaining in Finland only. The value of production staying on the domestic market is obtained by deducting exports from the value of domestic supply.
The most important function of producer price indices is to serve as deflators. Producer price indices are used to deflate the value of production in, for instance, national accounts calculations. From the deflator perspective it is important that a price index is also compiled for all CPA product categories for which domestic supply/exports/imports is high. The emphasis on the indices’ function as deflator affects the selection of product categories for producer price indices. The cut off method is applied in sampling the product groups. The CPA product categories with the highest production/export/import values are selected for the price indices. However, this was not a pure cut-off method in which all units beyond a certain threshold would be included. Occasionally, a product category that should in fact be included in the sample may be missing and, on the other hand, product categories that do not exceed the threshold value may be included.
In addition to the data collected direct from enterprises, price data or point figures from other statistics of Statistics Finland are also used in calculating the producer price indices. These statistics include such as the Index of Producer Prices of Agricultural Products, the Building Cost Index, the Cost Index of Civil Engineering Works, the Consumer Price Index and the Volume Index of Newbuilding. The data of the Index of Producer Prices of Agricultural Products are used in the monitoring of vegetable prices. The data of the Building Cost Index are used to monitor the prices of certain building products. An implicit price index derived from the Cost Index of Civil Engineering Works and the Volume Index of Newbuilding is used to monitor prices in construction.
The development in the prices of certain raw material based products in imports and exports is measured with the import and export unit value prices obtained from the foreign trade statistics of Finnish Customs. Unit values are only used to measure the price development of homogeneous product groups, such as timber, cereal, and imported and exported electricity. In addition to data from Finnish Customs, data from the Finnish Forest Research Institute, the Natural Resources Institute Finland, the Energy Authority, the Finnish Energy Industries and some international commodity exchanges, such as the London Metal Exchange are used in the producer price indices
The web questionnaire of the producer prices has been tested in connection with its introduction and when changes have been made to it. The response burden of the data collection is monitored regularly. In addition, the non-response rate of the inquiry is monitored monthly.
Frequency of data collection
Cost and burden
The overall index of producer price indices describes the average development in the prices of the product groups included in the index. The individual products whose prices are monitored, or variants, reported by an enterprise do not have their own weights but the enterprise-specific CPA product category indices, or micro indices, are calculated as the geometric average of the price ratios (=current price/price at comparison period) of the products belonging to that category. The micro indices are aggregated into an overall index and to the higher levels of the CPA product classification according to Laspeyres' index formula with a weighting coefficient corresponding to each product category and enterprise. In other words, changes in the price ratios of individual products have different-sized effects on the overall index.
In producer price indices, several methods are applied to control changes in the characteristics to make sure that the best possible method for measuring price change is always used. In the first place, efforts are made to collect an overlapping price observation for the changed product. In practice, this means that as the product changes the price for the preceding period is collected in addition to the price for the reference period. This allows the true change in the price to be calculated and the price history stays unbroken despite the change in the monitored product. The price for the reference period can concern the month or quarter and the preceding period refers to the preceding corresponding period. If overlapping price observations cannot be obtained, various pricing methods can be used to measure/assess the price change, such as model or component pricing. Expert assessment can also be used to assess price changes. In this case, the respondent is asked to assess which proportion of the price change is a genuine change in price and which proportion is due to the change in the characteristics of the product. The expert assessment is based on the idea that the data supplier enterprise is best equipped to estimate the price development of its own products. If neither an overlapping price observation nor an expert assessment can be obtained and price measurement methods cannot be applied, the price development of the product is imputed with the average change in the prices of other products belonging to the same commodity group. The imputation is based on the assumption that the prices of products in the same commodity group develop in roughly the same way. If none of the above methods can be used, discretionary use of the following methods is possible:
- The characteristics of the changed product are assumed to be the same as that of the earlier product. In this case, the price change is included in the index as such.
- The price change is assumed to derive entirely from a change in the characteristics, in which case the price change is eliminated, and the index does not change as the product changes.
Price measuring and methodologies to control changes in quality are constantly being developed and international guidelines and recommendations are taken into account when applying different methods.
Documentation on methodology
Principles and outlines
Contact organisation unit
Legal acts and other agreements
Statistics Finland compiles statistics in line with the EU’s regulations applicable to statistics, which steer the statistical agencies of all EU Member States.
Producer price indicies comply with the following regulations:
- Regulation (EU) 2019/2152 of the European Parliament and of the Council on European business statistics
- Commission Implementing Regulation (EU) 2020/1197
Further information: Statistical legislation
Confidentiality - policy
Further information: Data protection | Statistics Finland (stat.fi)
Confidentiality - data treatment
If the price movements of single enterprise can be detected from any 1-, 2-, 3- or 4-digit CPA level index, then that index series sent to Eurostat is flagged as confidential data.
Further information: Publication principles for statistics at Statistics Finland
Accessibility and clarity
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.
Data revision - policy
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.
Further information: Quality management | Statistics Finland (stat.fi)
Further information: Publication principles for statistics
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