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Quality Description of Producer Price Index 2005=100

• 1. Relevance of statistical information
• 2. Methodological description of 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

Producer price indices measure the development of commodity prices from the perspective of enterprises. The producer price indices comprise five separately calculated indices: the Producer Price Index for Manufactured Products, the Export Price Index, the Import Price Index, the Wholesale Price Index and the Basic Price index for Domestic Supply. All these indices measure price development slightly differently because the price concepts used and the industries covered vary by index.

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

1.2 Introduction to the concepts essential for understanding the statistics, and the used classifications, research subject, data collector and data providers

1.2.1 Information source

The price data of producer price indices are collected mostly directly from enterprises. The data are primarily collected with a web-based data collection system or by email. In addition to data collected directly from enterprises, the price data or point figures of other Statistics Finland's statistics are also used in calculating producer price indices. Such statistics are e.g. the Index of Producer Prices of Agricultural Products, the building cost index as well as the cost index of civil engineering works. The price development of certain import and export headings based on raw materials is measured with the import and export unit price data obtained from Board of Customs foreign trade statistics. Additionally, producer price indices use data from the Finnish Forest Research Institute, from the Energy Market Authority, from Finnish Energy Industries/District heating and from certain international commodity exchanges like the London Metal Exchange.

1.2.2 Classifications

The industrial classification in use is the national TOL 2008 classification, which is based on the revised NACE Rev 2. classification of industries (Nomenclature générale des Activités économiques dans les Communautés Européennes). Correspondingly, the new 6-digit Finnish version of the EU CPA 2008 classification of goods and services by activity (Statistical Classification of Products by Activity in the European Community) is used as the classification of the commodity headings included the indices. In addition to this, the MIG (Main Industrial Groupings) classification is used, and the 1949=100 producer price indices use the United Nations ISIC-classification (International Standard Industrial Classification).

1.2.3 Concepts

Producer Price Index for Manufactured Products 2005=100

The Producer Price Index for Manufactured Products 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 factory price exclusive of taxes. The price of goods intended for export is usually the f.o.b. price (free on board). The Producer Price Index for Manufactured Products covers TOL 2008 categories B-E, that is, commodities ranging from minerals to water and waste management services.

Export Price Index 2005=100

The Export Price Index measures changes in the f.o.b. prices of export goods. Foreign-currency export prices are converted to EUR using the Bank of Finland's mean rate for the statistical reference month. The Export Price Index covers TOL 2008 categories A-E, that is, commodities ranging from agricultural products to water and waste management services.

Import Price Index 2005=100

The Import Price Index measures development in the c.i.f. prices of imported goods. C.i.f. prices are inclusive of expenses, insurances and freight. Foreign-currency import prices are converted to EUR using the Bank of Finland's mean rate for the statistical reference month. The Import Price Index covers TOL 2008 industries A-E, that is, commodities ranging from agricultural products to water and waste management services.

Basic Price index for Domestic Supply 2005=100

The Basic Price index for Domestic Supply measures changes in the tax-free prices of goods used in Finland as they first enter the market.3 The index includes both domestic and imported goods. 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 plus customs duties. The Basic Price Index for Domestic Supply covers TOL 2008 industries A-F, that is, commodities ranging from agricultural products to construction.

Wholesale Price Index 2005=100

The Wholesale Price Index measures average change in the purchase prices inclusive of taxes of goods used in Finland. The index includes both domestic and imported goods. Regardless of its name, the Wholesale Price Index does not describe the price development of wholesale trade, as it does not include the wholesaler margins. The Wholesale Price Index includes value-added tax as well as other indirect taxes. In addition to value-added tax, indirect taxes include diverse excise duties4, and motor car and motorcycle tax. The wholesale price for domestic goods comprises the factory price, valueadded tax and other indirect taxes. The wholesale price of imported goods comprises the c.i.f. price of the imports, customs duties, value-added tax and other indirect taxes. The Wholesale Price Index covers TOL 2008 industries A-E, that is, commodities ranging from agricultural products to water and waste management services.

1.3 Laws and regulations

These statistics are based on the Law on Statistics (280/2004) and on the European Council Regulation (EC) No 1165/98 concerning short-term statistcs. Only the information necessary for compiling the indices is collected. The confidentiality of the information is taken into account when publishing the statistics: no information on individual enterprises can be deducted from the results. Producer Price Index for services is a so-called insider statistic, which cannot be released into public before the official publication.

2. Methodological description of survey

2.1. Population and sample

The calculation of producer price indices is based on a sample. First the CPA headings are selected and then the enterprise sample is drawn. The price data used to calculate the index are collected from enterprises included in the sample. These price indices are considered to be descriptive of the average development in the prices of all manufactured products. The samples of CPA headings and enterprise data suppliers included in the producer price indices are generally revised at five-year intervals to maintain the timeliness of the indices. The CPA headings of the producer price indices 2005=100 have been selected from the total group of headings for which production, export or import was recorded during the year 2005.

2.2. Index calculation

The overall index describes the average development in the prices of the headings included in the index. Geometric averages for the headings of each enterprise are calculated on the basis of price ratios (= current price/price at base period) derived from individual variants. These micro indices are combined into an overall index/industry-specific 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 TOL 2008 classification 4-digit level producer price indices are Laspeyres indices. At a more detailed level than the 4-digit level weights can be revised as necessary and new commodities or data suppliers can be included in the index.

3. Correctness and accuracy of data

4. Timeliness and promptness of published data

The statistics are published on the 17th day or the next office day of the month following the month of the data.

The prices collected from the enterprises are mean prices of the month of the query. If defining a mean price is not possible, the price can also be the delivery / invoicing / payment price measured on the 15th day.

5. Accessibility and transparency/clarity of data

Latest release

Producer price indices are published on the 17th day of the month following the statistical reference month or on the first working day following it. A short release on the latest figures is published on the home page of the statistics.

Internet service

The published producer price index point figures are available in Statistics Finland's StatFin service. The service is free of charge and located under Tables on the producer price indices' web page. A monthly publication is produced of the producer price indices, which can be downloaded for free in pdf format under Available products and services on the producer price indices' web page.

Printed edition

A printed edition of the publication can be ordered from Statistics Finland (email myynti@tilastokeskus.fi, tel. +358 (0)9 – 1734 2011).

Customer-specific indices

A customer-specific index can be compiled for such goods groups which are not included in Statistics Finland’s regular index production or classification. Such indices can be produced from all price indices. Enquiries about chargeable customer-specific indices can be made to Statistics Finland, tel. +358 (0)9 – 1734 1 / producer prices.

6. Comparability of statistics

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 2011, December. Statistics Finland

Inquiries: Toni Udd (09) 1734 3380, Anna-Riikka Pitkänen (09) 1734 3466, Matti Suoniemi (09) 1734 3488, Merja Pokela (09) 1734 3283, Mervi Nyfors (09) 1734 3480, thi.tilastokeskus@stat.fi

Director in charge: Kari Molnar

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Updated 17.1.2012