Abstract
In April 2008 the Italian National Institute of Statistics (ISTAT) published estimates of price level differentials (PLIs) referred to the year 2006, based on a sample of twenty major Italian cities. The research project was carried out in collaboration with two other research Institutes, “Guglielmo Tagliacarne” and “Unioncamere”.
The experimental indicators aim to test the methodological research framework with the general purpose of assessing the possibility of using and integrating the statistical information currently supplied by Consumer Price Index (CPI) surveys in order to calculate the intra-national purchasing power parities (PPPs). For the time being the analysis only refers to a subset of selected products: Food and Non Alcoholic Beverages, Clothing and Footwear, and Furniture, which represent about 35% of the total-consumption expenditure basket. Although international shared methodology in standard spatial comparison was adopted, the exercise was run to fit the Italian economy better. Then, from a methodological point of view, the overall survey framework was closely linked to an underlying assumption of product comparability. As a more practical result, the exercise led us to acquire experience in testing the sampling procedure of commodities, locations and outlets. The achieved results seem to be very interesting, showing the existence of price differential levels across the country. They are also encouraging because they stress the importance of having a measure of price differential which refers to global consumer expenditure, in order to help economists analyse our domestic market.
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Notes
- 1.
In this article I present the first results of a project to calculate the differential level of consumer prices between twenty selected major Italian cities, jointly developed by Istat, Unioncamere and “Istituto Guglielmo Tagliacarne”, with the cooperation of Municipal Statistical Offices which are in charge of most of the CPI survey. See also Istat (2008).
- 2.
Cambridge Econometrics Department conducted a specific survey for EUROSTAT to calculate regional PLIs, using some price data collected for the CPI and integrating them with other specific survey data (Cambridge Econometrics, 2002).
- 3.
More in detail, with reference to the COICOP classification system, the Consumer Price indices are published for 12 expenditure chapters, 38 product categories, 106 product groups, and 205 group of BHs.
- 4.
For some products that show a bigger price volatility, the temporal cadence could vary. More precisely, the price collecting frequency is defined as follows: • twice a month, every 1st and 12th of each month for fruit and vegetables and fish, every 1st and 15th for car fuel; • monthly for other foods like fresh meat, processed food, for non durable goods such as house cleaning products, for semi-durable goods such as clothing, for some durable goods such as appliances, for certain services such as cinema, and for utility bills (gas, water, etc.); • quarterly in the months of February, May, August and November for some durable goods such as furniture and for some services, especially medical services; in the months of January, April, July and October for rents and for housing.
In 2008 there are 450 BHs the prices of which are recorded monthly, 61 for which they are collected quarterly, and 22 for which collection is once a fortnight.
- 5.
The remaining 246,340 available price quotations were not equipped with sufficient information as to their basic characteristics so as to permit the exact identification of the collected products, and so they were not used in the PPP calculations.
- 6.
Similar choices have already been measured in other countries. For the United Kingdom see Wingfield et al. (2005).
- 7.
The municipality of Bari did not do the direct survey on Clothing and Footwear. The municipalities of Cagliari and Campobasso only did one of the two biannual surveys.
- 8.
The municipality of Bari and Cagliari did not the direct survey on Furniture.
- 9.
Unlike the traditional procedure, the aggregation procedure implemented here makes use of the geometric mean of the lower-level indices weighted by the local structure of consumption, instead of the arithmetic mean.
References
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Cambridge Econometrics (2002, 23 December). Provision of Statistical Services, CPI and Ppp Application (A final report for EUROSTAT). Unit of Price Comparison and Correction Coefficient.
EUROSTAT/OECD (2006). Methodological manual on purchasing power parities, ISSN 1725-0048. Retrieved from http://epp.eurostat.ec.europa.eu/pls/portal/url/page/PGP_MISCELLANEOUS/PGE_DOC_DETAIL?p_product_code=KS-BE-06-002
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De Carli, R. (2010). Intra-National Price Level Differentials: The Italian Experience. In: Biggeri, L., Ferrari, G. (eds) Price Indexes in Time and Space. Contributions to Statistics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2140-6_6
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