ICP-Africa Regional Workshop Pretoria, South Africa June 2011

Copyright 2011, The World Bank Group. All Rights Reserved Outline 1. Dimension of geography 2. Products to be priced a. Selecting the products: important or less important b. Product specifications c. Number of products to be priced d. The global core list and the regional lists 3. Timeframe of survey 2

Copyright 2011, The World Bank Group. All Rights Reserved Rural Urban Rural Urban 3 1. DIMENSION OF GEOGRAPHY Region A City ACity BTown AVillage A Region B City CVillage C Stratifying a country Country / Economy A Obtain average national prices covering expenditures throughout the economic territory of the country.

4 City / Town / Village / etc. Shopping District A Outlet Type AOutlet Type BOutlet Type C Shopping District B Outlet Type AOutlet Type B Outle t Location of Outlets

5 Guidelines for the Selection of Outlets The selection of outlets should take into account The different types of outlets Their relative share of the overall expenditures Considerations for the selection of outlets Volume of their sales Variability of their prices Location Number of outlets per outlet type

6 Outlet Types Outlet typeExamples Large shopsSupermarkets, hypermarkets, department stores Medium and small shopsMinimarkets, kiosks, neighborhood shops, grocery stores, convenience stores MarketsOpen markets, covered markets, wet markets Street outletsMobile shops, street vendors, Bulk and discount storesWholesale stores, discount stores Specialized storesSupply stores, hardware stores, furniture stores Private service providersTaxi cabs, hotels, restaurants, private schools, private hospitals Public or semipublic service providers Water suppliers, electric power companies, public schools, public hospitals Other kinds of tradeOnline (Internet) shopping sites, catalog orders

Copyright 2011, The World Bank Group. All Rights Reserved 7 2. PRODUCTS TO BE PRICED a. Selecting the products: important or less important ICP 2011: Within each basic heading for the household consumption expenditure, countries will be asked to indicate whether each product is IMPORTANT or LESS IMPORTANT. Country A AvailabilityImportance CodeBasic heading and product name Available = 1Important = 1 Not available = 0Less important = 0 1.Bread and cereals Rice Long grain rice, parboiled Long grain rice, nonparboiled Long grain rice, family pack Jasmine rice Basmati rice1 1 Intra-country point of view Important products: Products whose expenditure share in the basic heading is large.

8 Important Less important Product 2 Product 1 Important Less important Product 1 Product 2 Country ACountry B Intercountry / regional point of view Country A is required to price Product 2, even though it has classified the product as less important, in order to provide links with other countries that have classified the product as important, such as Country B—and vice versa for Product 1. Expenditure share

Three guidelines to determining whether a product is important: 1. Is it in the CPI? 2. Use own judgment or common knowledge 3. Ask the experts The experts, mostly shopkeepers, can answer the question, because the success of their businesses depends on knowing which products are best -sellers and which are bought less often. The experts, mostly shopkeepers, can answer the question, because the success of their businesses depends on knowing which products are best -sellers and which are bought less often. National coordinators may know whether a product is IMPORTANT (that is, it has a large expenditure share in the basic heading) from his or her own knowledge. National coordinators may know whether a product is IMPORTANT (that is, it has a large expenditure share in the basic heading) from his or her own knowledge. 9 How to Determine Whether a Product Is Important If a product is the same as, or similar to, a good or service included in the CPI, IT IS IMPORTANT. If a product is the same as, or similar to, a good or service included in the CPI, IT IS IMPORTANT.

10 Notes for Determining Importance Notion of what is important--it’s WITHIN a basic heading (BH) Note that “large” and “small” relate to the basic heading. It is possible that the basic heading “Wine” has a smaller expenditure share compared with other basic headings. Still, specific wine product(s) should have a large expenditure share (= important) within the basic heading. If compared with other BHs If compared within the BH

Copyright 2011, The World Bank Group. All Rights Reserved 2. PRODUCTS TO BE PRICED b. Product specifications What is the SPD (structured product description) approach? 11 Examples of product list using SPD approach (basic heading of “Fresh milk”) Fresh milkNumber of units Unit of measurement MinMaxBrandPackagingProcessingFat content Milk, un- skimmed Pasteurized 1Liter0.81.5Well knownPre-packed; cartonPasteurised; HTST (High Temperature/Short Time) treatment Natural (3-4%) Milk, un- skimmed UHT 1Liter0.51.5Well known/National/Re gional Brand Pre-packed; cartonUltra High Temperature (UHT)Natural (3-4%) QuantityPackaging Product characteristicBrand name CodeName Common for the basic heading Values of individual product (Classification Valuables) Structured product descriptions are designed to clearly define the products to be priced. Values of individual product

Copyright 2011, The World Bank Group. All Rights Reserved PRODUCTS TO BE PRICED c. Number of products to be priced Small number of samples Large number of samples Product productProduct More precise! But costly… Less precise… But feasible! What, then, is the optimal number of products to be priced?

13 Determining the Number of Products (1) The relationships of the following are used to evaluate the number of products: 1. The relative standard deviations2. Target levels of precision The optimum: Enough products that the sampling error of the basic heading PPP based on the product PPPs is within a target level of precision. The greater the variance (deviation)  the lower the level of precision a larger sample size is needed to achieve target precision The smaller the variance (deviation)  the greater the level of precision a smaller sample size is okay to achieve target precision Therefo re,

14 Determining the Number of Products (2) The number of products to be priced under each basic heading depends on The price variability of the basic heading The relative importance of the basic heading The degree of overlap of products across countries

Copyright 2011, The World Bank Group. All Rights Reserved PRODUCTS TO BE PRICED d. The global core list and the regional lists *We will learn the approaches in Module 8. Africa regional items (Selected) GCL items Asia and Pacific regional items (Selected) GCL items CIS regional items (Selected) GCL items LAC regional items (Selected) GCL items Western Asia regional items (Selected) GCL items OECD - Eurostat regional items (Selected) GCL items ICP Core List Approach 601 core items Each country is expected to price of the 601 GCL items in their regional list. Amalgamated regional lists

Global Office Regional coordinator s National coordinator s Global Core List (GCL) 2011 global core list Using SPDs (structured product descriptions)

2011 amalgamated regional list 17 Amalgamated Regional Lists – How they were developed First regional draft list First regional draft list ICP 2011 Global Core List ICP 2011 Global Core List Perfect match Compara ble Exclus ive COMBI NE - No duplication - Align characteristics CodeBasic Heading & Product name Major durables for outdoor recreation String Basic Acoustic Guitar for Beginner <-- Global core items Portable Electronic Keyboard <-- Global core items Outboard engine <-- Global core items Inflatable boat <-- Global core items Bongo drum <-- Regional items Tambourine <-- Regional items Finalize This process was carried out through Exchange of Regional workshops

Copyright 2011, The World Bank Group. All Rights Reserved TIMEFRAME OF SURVEY Average national prices throughout the year as a whole. Period – the target year (2011) Frequency - usually quarterly Timing Scheduling Factors in the timeline for the survey