Home > Statistics > Producer price indices > 2020 > January > Quality Description of Producer Price Indices 2015=100

Quality Description of Producer Price Indices 2015=100

• 1. Relevance of statistical information
• 2. Methodological description of the survey
• 3. Correctness and accuracy of data
• 4. Timeliness and promptness of published data
• 5. Accessibility and transparency/clarity of data
• 6. Comparability of statistics
• 7. Coherence and consistency/uniformity

1. Relevance of statistical information

1.1 A summary of the information content and purpose of use of the statistics

The producer price indices 2015=100 comprise five indices: 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. These indices measure price development of commodities from the enterprise's viewpoint and describe the relative changes in these prices against the base or comparison periods. Because the price concepts used and the included industries vary by index, the indices measure price development somewhat differently.

One of the key usages of the producer price indices is to function as a deflator in national accounts calculations. With them, the value of production or sales is converted to the volume of production. Producer price indices are also used as an index clause in agreements, which means that the final amount of a payment specified in an agreement is tied to a change in some index. Enterprises can use the data of the statistics when comparing the price development of their purchases or sales with the average development of the producer price indices. Data from producer price indices can be combined with other data on business trends, such as those on the volume index of industrial output in order to analyse business trends more closely.

1.2 Data sources and classifications and concepts used

1.2.1 Information source

The price data of the producer price indices are collected primarily from enterprises. 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. The development in the prices of certain raw material headings in imports and exports is measured with the data obtained from the foreign trade statistics of Finnish Customs. In addition, data from 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.

1.2.2 Classifications

Starting from the base year 2015, the classification is the Classification of Products by Activity CPA 2015 (CPA Ver. 2.1) which is the European Statistical Classification of Products by Activity. In addition, the classification by purpose of use, MIG is used: energy products, raw materials and producer’s goods, investment goods, and durable and other consumer goods. In indices with base year 2010, the publication levels used is the Standard Industrial Classification 2008 based on the EU's standard industrial classification NACE Rev. 2. The UN's International SITC product classification (Standard International Trade Classification) is used in indices whose base year is 1949. In addition, the UN's International ISIC industry classification (International Standard Industrial Classification) is used in the Producer Price Index for Manufactured Products 1949=100.

1.2.3 Concepts used

Producer Price Index for Manufactured Products

The producer price index for manufactured products 2015=100 measures average changes in the prices of goods sold by domestic producers. The index includes both goods sold at home and goods sold abroad. The price used for goods intended for the domestic market is the so-called at the factory-gate price that does not include taxes. The price for export goods is the price obtained by the exporter. It is usually the same as the export f.o.b. price (free on board). The Producer Price Index for Manufactured Products covers the commodities in industries B-E, ranging from minerals to water and waste management services.

Export Price Index

The Export Price Index 2015=100 measures changes in the f.o.b. (Free on board) prices of export goods. Foreign-currency export prices are converted to euro using the mean rate for the reference month. The Export Price Index 2015=100 covers the commodities in industries A–E, that is, from agricultural products to water and waste management services.

Import Price Index

The Import Price Index 2015=100 measures development in the c.i.f. (Cost, insurance and freight) prices of imported goods. C.i.f. prices are inclusive of cost, insurances and freight. Foreign-currency import prices are converted to euro using the mean rate for the reference month. The Import Price Index 2015=100 covers the commodities in industries A–E, from agricultural products to water and waste management services.

Basic Price index for Domestic Supply

The Basic Price Index for Domestic Supply 2015=100 measures changes in the tax-free prices of goods used in Finland as they first enter the market. As the index measures the tax-free price development of total domestic supply at the stage when products leave the producers and enter the market, and correspondingly as products arrive in the country after customs, it is more accurate to talk of the basic price of a product than of the producer price. The price for domestic goods is the factory price exclusive of taxes. The price for imported goods is the c.i.f. price of the imports to which customs are added The Basic Price Index for Domestic Supply covers the commodities in industries A–F, from agricultural products to construction.

Basic Price index for Domestic Supply including taxes

The Basic Price index for Domestic Supply, Including Taxes 2015=100 corresponds with the Basic Price Index for Domestic Supply, but shows changes in the value added tax, excise taxes and car taxes. The Index includes both domestic and imported goods. The price for domestic goods comprises the factory price, value-added tax and other indirect taxes. The price for imported goods, in turn, comprises the c.i.f. price of the imports, customs duties, value-added tax and other indirect taxes. Besides the value-added tax, indirect taxes comprise diverse excise duties, and the vehicle tax. The Basic Price index for Domestic Supply, Including Taxes covers the commodities in industries A–F, from agricultural products to construction.

Other concepts can be found on the home pages of the producer price indices under “Concepts and definitions” (http://tilastokeskus.fi/til/thi/kas.html).

1.3 Acts and decrees

The production of the Index is based on the Finnish Statistics Act (280/2004, amend. 361/2013) and on a Council Regulation (EC) concerning short-term statistics (No 1165/1998 and 1158/2005). Only the data necessary for the calculation of the index but not available from another source are collected from data suppliers. Confidentiality is taken into account when data are published. The data or development of a single enterprise cannot be deduced on the basis of the results. The producer price indices belongs to the so-called insider statistics, data from which may not be released to the public before the set of statistics is published.

2. Methodological description of the survey

2.1. Population and sample

The definitions of the populations of the Producer Price Indices 2015=100 differ from one another. The population of the Producer Price Index for Manufactured Products covers all commodities sold by domestic producers at market price that belong to industries B-E (from mining and quarrying to water and waste management services). The population of the Export Price Index covers all commodities sold by domestic enterprises to foreign actors that belong to industries A-E (from agriculture to water and waste management services). The population of the Import Price Index covers the products bought by enterprises operating in Finland from foreign actors that have been imported to Finland (Finnish consumption, transit export removed). The population of the Import Price Index covers all commodities that belong to industries A-E (from agriculture to water and waste management services).

The population of the Basic Price Index for Domestic Supply consists of products to be sold entering the domestic market for the first time (domestic manufacture + imports). The index covers all commodities that belong to industries A-F (from agriculture to construction). The population of the Basic Price Index for Domestic Supply, Including Taxes is the same.

The sample of the Producer Price Indices is created in two stages. First the CPA product categories have been selected and then the data provider enterprises are drawn for each CPA product category. The weight frames of CPA product categories for the producer price indices are built using the data of the supply and use tables of National Accounts and Finnish Customs' statistics on foreign trade. The supply and use tables include the summed up value of Finnish enterprises’ production, exports and imports by heading. The value of production staying on the domestic market is obtained by deducting the value of exports from the value of domestic supply. The time cut-off principle is used in heading selection, that is, those CPA headings were selected for price indices in which the value of domestic supply/exports/imports was highest.

The frames of the data supplier sample have been formed on the basis of data obtained from the statistics on industrial output and the Finnish Customs' foreign trade statistics. The enterprise-specific values of exports and imports by heading were obtained from the Finnish Customs' foreign trade statistics. In terms of production that remains on the domestic market, the enterprises’ heading-specific supply value has been calculated by deducting the enterprise's heading-specific value of exports from the heading-specific supply value of the commodity statistics.

The enterprise sample was drawn by stratified sampling. Stratification is based on the value has been used enterprises’ domestic supply/exports/imports. Simple random sampling was used within the strata. The number of data suppliers selected for each heading depended on the size of the entire frame. The more enterprises in a sample, the more data suppliers were selected from that sample. The dominant enterprises in each heading were selected to the sample with a probability of one.

The products monitored in each commodity category or variants whose prices are monitored monthly have been selected in cooperation with the data suppliers.

2.2. Index calculation

The overall index of the Producer Price Index for Manufactured Products describes the average development in the prices of the headings included in the index. Geometric averages for all the headings of each enterprise are calculated on the basis of price ratios (=current price/previous price) derived from individual variants. These micro indices are combined into an overall index/product index by weighting each micro index with its own weighting coefficient. In other words, price changes of individual commodities have different-sized effects on the overall index. At the CPA product classification 4-digit level producer price indices are Laspeyres indices. Below the 4-digit level, the weights can be revised as necessary and new commodities or data suppliers included in the index.

The calculation of the Producer Price Index will be reviewed starting from the Index for January 2019 so that the indices become annual chain-linked indices. In practice, the shift to the chain-linked index method means that the weight structure of the Producer Price Index will in future be updated every year. The new weight structure will take 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, if needed. The base year of the Index remains unchanged (2015=100). In future, the index calculation will be made so that each index series is chained forward with changes in the Index calculated according to the new weight structure. A more detailed description of the calculation method is available in the updated Producer Price Index for Manufactured Products and Producer Price Indices for Services 2015=100 Handbook for Users to be published in near future. These changes improve the quality of the Index, because with their help, structural changes in production, exports and imports can be taken into account faster in future.

3. Correctness and accuracy of data

The Producer Price Indices are calculated using some 5,500 price data items collected from approximately 1,500 data suppliers. The numbers of data items and suppliers vary by index: for example the Producer Price Index for Manufactured Products covers some 3,000 price data items. These indices measure price development of commodities from enterprises' viewpoint slightly and describe the relative changes in these prices against the base or comparison periods.

The accuracy of the Producer Price Indices is affected by possible sampling error and data processing errors. The magnitude of the errors has not been estimated.

The correctness of the indices is also influenced by non-response, which in producer price indices is between two and five per cent on monthly level. Efforts are made to reduce non-response by reminding respondents to supply the requested data.

4. Timeliness and promptness of published data

The statistics are published on the 24th day of the month following the statistical reference month or on the first working day following it at 8 am. As an exception, the data for January are released on the 26th day of the following month, and the data for November are released on the last workday preceding 24 December.

The price data collected from enterprises are average prices in the month of the inquiry. If an average price cannot be determined, the price data notation may also be the price for delivery/invoicing/payment on the 15th day of the month.

5. Accessibility and transparency/clarity of data

Statistical release

A short release discussing the latest figures of the Producer Price Indices is published monthly online, the release can be found on the home page of the statistics.

Internet service

Data are published on the home pages of the statistics. The publication of the Producer Price Indices can be downloaded in PDF format from the home page (http://tilastokeskus.fi/til/thi/tup.html) after the statistics have been released. Industry-specific index series 2015=100, 2010=100 and 1949=100 are also published in Statistics Finland's self-service system (StatFin) for statistical data. The user manuals of Producer Price Indices are available in PDF format at http://tilastokeskus.fi/til/thi/men. Here you can also find the CPA and MIG weight structures of the indices. All the above-mentioned services are free-of-charge. In addition, Eurostat, the Statistical Office of the European Communities, publishes country-specific producer price indices data on its website.

Customer-specific indices

A customer-specific index can be compiled for groups of goods that are not included in Statistics Finland's regular index production or classification. Special indices can be produced from all producer price indices. You can inquire about chargeable special indices from Statistics Finland, phone +358 29 551 1000/ producer prices.

6. Comparability of statistics

The producer price index and the implicit price index of national accounts may differ considerably from one another for some products/indices. Differences are caused, for example, by structural differences in the commodity combinations included in the indicators and by different calculation methods.

The price indices of imports and exports of Finnish Customs based on unit values differ from the import and export price indices calculated by Statistics Finland. The reason for the deviations is, on one hand, different methods and, on the other, different observation data.

A long time series 1949=100 is calculated on the producer price indices. This time series is always chained with the newest index, whereby the changes in the index correspond to the changes in the newest index.

7. Coherence and consistency/uniformity

The point figures of Producer Price Indices concerning a certain month are final; they are not to be revised or altered other than in exceptional cases.

Source: Producer Price Index 2020, January. Statistics Finland

Inquiries: Anna-Riikka Pitkänen 029 551 3466, Veli Kettunen 029 551 2693, thi.tilastokeskus@stat.fi

Director in charge: Jan Nokkala

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Updated 26.2.2020