CHAPTER 5 – FREQUENCY AND TIMING OF THE PRODUCER AND INTERNATIONAL TRADE PRICE INDEX RELEASES


BACKGROUND

5.1 Australia is a signatory of the Special Data Dissemination Standard (SDDS), an initiative of the International Monetary Fund (IMF), which covers among other things, periodicity and timeliness of statistical releases. As a signatory, Australia is subject to evaluation by the IMF's Report on Observance of Standards and Codes (ROSC).

5.2 The Producer and International Trade Price Indexes (PPIs and ITPIs) are compiled quarterly by the Australian Bureau of Statistics (ABS) for quarters ending in March, June, September and December each year, and are released between three and four weeks after the end of the reference quarter in Producer Price Indexes, Australia (cat. no. 6427.0), and International Trade Price Indexes, Australia (cat. no. 6457.0). The quarterly release schedule fulfils the requirements of the Australian National Accounts (ANA) and Balance of Payments (BOP).

5.3 Australia avails itself of the SDDS flexibility option for the periodicity of the PPIs to compile and disseminate the indexes on a quarterly basis. The results of this aspect of the IMF's investigation and Australia's response is outlined below. The SDDS also has a flexibility option available for the timeliness of statistical releases.

5.4 In order to release the PPIs and ITPIs before the Consumer Price Index (CPI), and within a month of the end of the reference period (as per the SDDS), it is not possible to cover all transactions occurring during the third month of the reference period. A balance between timeliness, coherence with related ABS statistics and accuracy of the output will be examined. Strategies to accommodate an improved coverage of the third month of the reference quarter will also be evaluated.


FREQUENCY OF RELEASES

5.5 The 2010 IMF ROSC evaluated the periodicity of the PPIs and ITPIs. The ROSC recommended for Australia to, "assess user needs for monthly data. Examine the costs and benefits of producing a limited number of key producer price indices on a monthly basis to meet the ROSC requirement for monthly indices and the needs of users". However, the ROSC qualified that statement by noting that, "as the ABS has no evidence of user demand for a monthly PPI, Australia is not convinced of the need for monthly PPI data and does not consider this recommendation as a priority, given competing statistical priorities". (IMF, 2010b).

5.6 The ANA and BOP are released on a quarterly basis. Given the principal purpose of the PPIs and ITPIs is to support economic measurement within these publications, there is no support for the production of more frequent PPIs and ITPIs.


RELEASE TIMING

5.7 PPIs and ITPIs are currently released quarterly, roughly three weeks following the end of the reference period.

5.8 The release schedule for dependant or associated macroeconomic statistics is as follows:

• ITPIs are released on the Friday prior to the fourth Wednesday after the end of the reference quarter e.g. 22/07/2011;
• PPIs are released on the Monday prior to the fourth Wednesday after the end of the reference quarter e.g. 25/07/2011;
• CPI is released on the 4th Wednesday after the end of the reference quarter e.g. 27/07/2011;
• Balance of payments and international investment position statistics are released approximately two months after the end of the reference quarter e.g. 06/09/11; and
• Quarterly national accounts are released approximately two months after the end of the reference quarter e.g. 07/09/2011.

5.9 There are several factors which are influenced by the release timing of the PPIs and ITPIs.

Data acquisition

5.10 There are three statistical methods for PPI and ITPI data acquisition:

• Respondent pricing (form based);
• International Merchandise Trade data; and
• Administrative data.

5.11 Under existing release time frames, data completeness issues exist. For respondent pricing, less than ten percent of existing sample is collected for the third month of the quarter. For International Merchandise Trade data, only provisional data (subject to revision) is available for the first two and half weeks of the third month. Administrative data is complete for the reference period. Where rapid price change occurs in the final month (for example in oil prices) and are not incorporated within the reference period index, these price changes are reflected in the following quarter's price change estimates.

Statistical coherence

5.12 The ANA also use International Merchandise Trade data, although, the later quarterly ANA and BOP release schedule allows use of the entire set of reference period data and to take advantage of any revisions. The ITPI are final and are subject to revision only to correct a substantial error, not to incorporate revised data.

5.13 As a result, there are inconsistencies between the ITPI and ANA estimates of import and export price change. For example, there are differences between the export price index (EPI) and the export of goods implicit price deflator (IDP)/chain price indexes, and the import price index (IPI) and the import of goods IDP/chain price indexes. This is particularly the case when the prices of products are volatile.

5.14 The import and export goods IPDs and chain price indexes are released in Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) and Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).

5.15 Even if the data completeness issues were accounted for, some inconsistencies would remain between the ITPIs, ANA and BOP price measures. These inconsistencies are not related to data acquisition and use, but rather to differences in methodology and data source. These issues are further discussed in Chapter 6, under the heading: Import and export price measurement.

Expansion of scope

5.16 As the ABS increases the coverage of the PPIs and ITPIs, pressure on the release timing of the PPIs and ITPIs will increase. Conclusions articulated in Information Paper: Experimental Price Index for Retail Trade Margins, 2003 to 2006 (cat. no. 6402.0) discusses the difficulty for the timely compilation of services producer prices: "There are a range of issues facing a retail trade margins price index. The basic input data required for the construction of the trade margins price index (quarterly aggregate sales and cost of goods sold data) is such that it cannot be collected until at least some time following the end of the quarter... The consequence of this is that the trade margin price indexes cannot be compiled with the same timeliness as the producer price indexes for goods". (ABS, 2007).


RELEASE TIMING – OPTIONS FOR EVALUATION

5.17 To ensure a balance between user needs and accuracy and coherence of the indexes, the following options are listed for further exploration by the ABS and for user comment.

Improve price collection and quality assurance processes

5.18 The ABS will investigate methods to accelerate price collection and quality assurance processes for product pricing within the PPIs and ITPIs (including retail trade margins).

Improve data delivery

5.19 The ABS is evaluating the possibility of an improvement in International Merchandise Trade data delivery in terms of accuracy, removing the requirement of revisions and timeliness, to allow the identical data sets to be used within the ITPIs and ANA/BOP.

Stagger the releases of PPIs and ITPIs

5.20 If the timeliness of the International Merchandise Trade data or the ABS collections and quality assurance program cannot be improved, the ABS will evaluate the possibility of staggering the release of the PPIs and ITPIs, by index. The staggering could be determined by the availability of input data. A staggered release of the PPIs and ITPIs, may allow the inclusion of full quarter pricing for International Merchandise Trade data (resulting in increased coherence across macroeconomic statistics) and Retail trade margin services data. Under this option the ABS may need to avail itself of the SDDS timeliness flexibility provisions.

5.21 A strategy of this nature may be particularly important as more complex services price measures are introduced to the suite of PPIs.

Delay the PPI and ITPI releases

5.22 The ABS will evaluate rescheduling PPI and ITPI releases to a later date and severing the link between the PPIs as a predictor of certain components of the CPI. Previous consideration within the ABS has found an approximate two week period in which the PPI and ITPI release dates could be delayed without impacting on dependant downstream ANA and BOP statistical releases. Full reference period pricing in the majority of cases will be possible, although this two week period will not be sufficient for the inclusion of Retail trade margin price data within the PPIs. Increased coherence across macroeconomic statistics would result, although under this option the ABS may need to avail itself of the SDDS timeliness flexibility provisions.

5.23 Rescheduling the PPI and ITPI releases will have implications for external users with previous discussions finding little support for a delayed release strategy. Key users of ABS macroeconomic statistics in the past have expressed reservations regarding any delay in publication of the PPI, and would not support its release after the CPI. The reservations centred on confusion with regard to price inflation signals with another prices publication being released in the public domain immediately following the heavily scrutinised CPI. Additional consultation will be undertaken on this issue.


ABS POSITION

5.24 The demand for more frequent releases of the PPIs and ITPIs has previously been explored. While the ABS uses the SDDS flexibility option to release on a quarterly basis, due to the lack of any user demand for monthly PPI data, the ABS view is that monthly PPIs would not represent value for money and would divert resources away from the production of higher priority outputs.

5.25 In line with the principal purpose, the ABS seeks to improve the quality of its outputs and to increase the coherence between macroeconomic statistics. Timing release options will be explored to realise quality improvements in the PPIs and ITPIs and by extension ANA and BOP. The ABS favours delaying the PPIs and ITPIs.


USER COMMENTS

5.26 Users are invited to comment on how the proposed timing of release options may impact users.