Workshop on Price Index Compilation Issues February 23-27, 2015 Publication and Analysis Gefinor Rotana Hotel, Beirut, Lebanon

METAC and IMF Statistics Dept. Introduction Paragraphs of the 2003 ILO Resolution give the agreed international standards on dissemination. More specifically, the Resolution states. Publication should be as soon as possible after the index reference period. Be in a readily accessible form to all users at the same time. Adhere to a timetable which is published well in advance. The rules relating to publication of a CPI should be publicly available to facilitate transparency. The resolution also includes. Guidelines on the detailed presentation of price indices in the CPI publication. February 23-27, 2015

METAC and IMF Statistics Dept. Introduction It is the Statistician’s responsibility to ensure that the CPI is produced & presented objectively without political interference and in a user-friendly way. The ILO resolution should be adhered to. The CPI press notice should be separate from any related political statements referring to government policies. Exceptionally, a press notice with a factual statement on government policy may be provided for contextual reasons. The publication timetable should be determined by operational needs taking into account user’s needs for a timely publication. The re-release timetable should be published in advance. At least 3 months plus provisional release dates for further 3? Helpful to users, increases transparency. Helpful for forward planning of production timetable. Any non-compliance should be documented. February 23-27, 2015

METAC and IMF Statistics Dept. Introduction It is the Statistician’s responsibility to ensure that the CPI is produced & presented objectively without political interference and in a user-friendly way. The ILO resolution should be adhered to. The CPI press notice should be separate from any related political statements referring to government policies. Exceptionally, a press notice with a factual statement on government policy may be provided for contextual reasons. The publication timetable should be determined by operational needs taking into account user’s needs for a timely publication. The re-release timetable should be published in advance. At least 3 months plus provisional release dates for further 3? Helpful to users, increases transparency. Helpful for forward planning of production timetable. Any non-compliance should be documented. February 23-27, 2015

METAC and IMF Statistics Dept. Timing of publication Timing of publication involves a trade-off between achieving the earliest possible release and the need to quality assure the data & index calculation and perform some initial analysis. To reduce the risk of errors. To provide users with a detailed analysis to assist interpretation. Other operational considerations include. Managing the NSI’s publication workload and user’s preferences for a coherent set of new economic data released simultaneously. February 23-27, 2015

METAC and IMF Statistics Dept. Timing of publication Ideally, publication should be at a point in the week and at a time of day which allows for balanced comment by outside commentators within a short time of release. The CPI can be a market sensitive statistic. Should be released at a set time of the day e.g. early in day before stock exchange opens. A set formula relating the publication date to the price reference date of the latest index number is recommended. E.g. “n” working days after end of price collection + “m” for Public Holidays. This guards against accusations that publication of unfavourable data is being withheld or delayed for political reasons or being hidden by being timed to coincide with other announcements. The rules and any formula used for determining the price collection period should also be published & the price collection period given in the monthly press-release. February 23-27, 2015

METAC and IMF Statistics Dept. Pre-release access General principle is that official statistics should be made available to all at the same time. Some NSIs grant pre-release access to CPI to some Ministers and officials. So government can respond to issues of interpretation, policy issues (or make pre-emptive policy decisions). Rules for pre-release should be published together with names of individuals. Issues relating to pre-release rules include. –Which person determines pre-release access. –What factors determine such access. –The conditions that apply. –The timing of pre-release access. –The statistics covered. Numbers should be limited. February 23-27, 2015

METAC and IMF Statistics Dept. Procedures on publication day – release under embargo (“lock-up” arrangements) A typical lock-up model could be. Sign in and room is made secure. Mobile telephones are declared and switched off. Modems are not connected and no wireless networks are available. The statistical press notice is handed out and the statistician gives a presentation and answers any factual questions relating to the statistics. Participants use their remaining time to prepare their briefing. A few minutes before publication Internet access is made available in readiness of publication but no reporting of figures takes place. Participants report their stories at the time of publication via their chosen medium. February 23-27, 2015

METAC and IMF Statistics Dept. Procedures on publication day – pre-release & face-to-face briefings Figures should be released in a controlled environment which provides access to all at the same time by whatever medium is used - whether on paper or electronically. Release under embargo to accredited journalists and analysts: lock-up arrangements. Provides the media with an opportunity to analyze the latest CPI figures before their official release. Face-to-face briefing by statisticians The statistician responsible for compiling the CPI should be encouraged to provide face-to-face briefing not just in a lock-up but after publication where there is a clear and legitimate demand. Restricted to the statistics (no policy questions). Need for training. February 23-27, 2015

METAC and IMF Statistics Dept. Format and content of statistical press notice The statistical press notice should be. In a fixed format which does not change frequently and only changes following a formal review process. Published under the logo of the statistical office. Dated and give the address of the statistical office and a telephone number for dealing with queries. At a minimum it should contain. The index level and annual percentage change for each of the latest six months both for the “all items” index and for key sub-indices. An analysis of the main factors impacting on the annual inflation rate and/or contributing to the change in the annual inflation rate. Background notes giving definitions, coverage and statistical methodologies. February 23-27, 2015

METAC and IMF Statistics Dept. Format and content of statistical press notice The statistical press notice may also contain. Percentage change over one month for the “all items” index and for key sub-indices. Annual and/or quarterly average indices and associated rates of change. Monthly average prices for selected goods and services. Graphical presentation of the results. A table of international comparisons. The listing of future price collection periods is best avoided and circulation of this information is best restricted to those within the national statistics institute who need to know for operational reasons. Reduces risk of government manipulating the figures e.g. deferring a price increase until after price collection day. The statistical press notice may be supplemented with a short news release targeted at the popular media rather than expert analysts. February 23-27, 2015

Format and content of statistical press notice February 23-27, 2015METAC and IMF Statistics Dept.

Format and content of statistical press notice February 23-27, 2015METAC and IMF Statistics Dept.

Format and content of statistical press notice – methodological changes etc Early warning of methodological changes and planned revisions. Planned methodological changes should be pre- announced. For instance by a note in the CPI statistical press notice which immediately precedes the introduction of the change. Indicative back series should be published so that users have a comparable time series for analysis. Where a number of methodological changes are introduced a detailed reconciliation should be published between the old and new series. February 23-27, 2015

METAC and IMF Statistics Dept. Format and content of statistical press notice - revisions Scheduled and unscheduled revisions. Paragraph 2.39 of the CPI Manual states that, "most countries have deliberately adopted a policy of not revising the index once it has been published”. But where index is “revisable”. “Scheduled” revisions to the CPI should be managed systematically, pre-announced and reflected in publication plans including appropriate footnotes in the press notice. Back series and a detailed reconciliation should be published. so that users have a comparable time series for analysis. February 23-27, 2015

METAC and IMF Statistics Dept. Standard calculations - choice of calculation periods The “headline” rate of inflation is normally the percentage change in the CPI comparing the latest month with the same month one year ago. Where inflation is relatively high, the focus is often on the monthly inflation rate m/(m-1). m/(m-12) is very up-to-date but. Can be volatile. Is dependent on the index of 12 months earlier. The monthly rate suffers from all of the problems of the of m/(m-12) plus seasonality. February 23-27, 2015

METAC and IMF Statistics Dept. Standard calculations - choice of calculation periods when figures volatile or strongly seasonal An alternative is the annual average method, y/(y-1). This has the advantage of eliminating most of the volatility associated with m/(m-12) but suffers from a sluggish reaction to the more recent movements in the CPI. Some statistical offices also present quarterly measures. q/(q-1) q/(q-4) More stable measures of “underlying” or “core” inflation are frequently calculated. Excluding fresh food items. Excluding energy. Trimmed mean. The precise presentation of the CPI data in the statistical press notice will depend on user needs and on the limitations of the data. February 23-27, 2015

Standard calculations - choice of calculation periods when figures volatile or strongly seasonal Typically, a conventional chain-linked index can be used to calculate changes between any two months after the base month. The CPI for May 1988 = and for August 2002 = then the percentage change between these months is If the base month changes If the base month changes. February 23-27, 2015METAC and IMF Statistics Dept.

Standard calculations and special presentations and analysis - averages February 23-27, 2015METAC and IMF Statistics Dept. Annual average indices are defined as the arithmetic mean of the twelve monthly values for the year in question. The annual average inflation rate can be derived from the annual average indices as the change in the annual average index from the year before. Calculation of monthly average prices For meaningful results, the items should be homogeneous across all outlets & over time.

METAC and IMF Statistics Dept. Standard calculations and special presentations and analysis- subgroups and special aggregates Possible special indices to suit user requirements Goods Services Calculated from the same item indices and same item weights used in the standard published sub-indices. February 23-27, 2015

METAC and IMF Statistics Dept. Standard calculations and special presentations and analysis - contributions to change in index Provide a powerful analytical tool for understanding movements in the CPI. Defined as the change that would have occurred in the all-items index if that component had undergone its observed change but all other component indices had remained unchanged from the start of the period. Contribution of component i to the monthly change in the all- items CPI is. February 23-27, 2015

METAC and IMF Statistics Dept. Standard calculations and special presentations and analysis - contributions to change in annual rate The formula for calculating the contributions of components to the all-items CPI 12-month rate is. When there is no change in weights between both points in time, then the above simplifies to. The sum of contributions across all categories equals the overall inflation rate and contributions can be negative as well as positive. February 23-27, 2015

METAC and IMF Statistics Dept. Standard calculations and special presentations and analysis - rounding It is common practice to calculate all CPI indices to maximum precision, and then round to one decimal place for publication. Rounding to two decimal places can be useful in some cases but can suggest spurious accuracy. Policy also needed for derived statistics e.g. annual & quarterly average indices, one-month and 12-month percentage changes. In particular whether they are calculated to maximum precision or derived from published rounded indices so that they can be replicated for transparency. There are two approaches which can be used in the computation of derived statistics. Calculate derived statistics from un-rounded (and unpublished) monthly indices. Calculate derived statistics from published rounded indices. Potential for some serious rounding effects. February 23-27, 2015