1. 1 Reflection consumers’ e- commerce change on the CPI Kyunghee Kim, Statistics Korea (KOSTAT) UNECE/ILO Meeting on Consumer Price Index

2. 2 Contents I.Korean CPI outline II. Internet development in Korea III. E-commerce in Korean CPI IV. Conclusion

3. 3 I. Korean CPI outline 1. Usage  Inflation measurement  Expenditure deflation at current prices or income  Indexation of social security benefit Pension, compensation, reparation

4. 4 I. Korean CPI outline 2. Scope  Households Exclude households whose primary activity is farming or fishing  Geographical area 7 metropolitan area and 31 large cities  Outlets The PDS collects prices of an item in 150 local stores.

5. 5 I. Korean CPI outline 3. Items and Weight  Items and weights are derived from the Household Income and Expenditure Survey (the HIES) conducted in 9000 households  Revision in every 5 years ending 0 or 5 Items, weight, and cities are changed The PSD prepares 2010 revision

6. 6 4. Price Collection  Conduct regularly every month  Agricultural product, gasoline, golden ring Three times a month  Manufactured goods and services Once a month I. Korean CPI outline

7. 7 II. Internet development in Korea  8 out of 10 households access the Internet Experience of Internet shopping No Experience of Internet shopping Total62.337.7 Male55.644.4 Female70.329.7  6 out of 10 persons experience the Internet shopping

8. 8 III. E-commerce in Korean CPI  For 19 items, the PSD has collected prices through the Internet shopping malls and produces the CPI since 2005.  The PSD prepares the revision of 2010 rebase  Three criteria for e-commerce’s items  Transaction percent  Survey availability  Different price trend

9. 9 III. E-commerce in Korean CPI  Transaction values E-commerce and cyber shopping survey Ad hoc survey in the HIES households Items : Households appliances, Cosmetic, Books, Computers and other appliances

10. 10 Commodity Group2005 2009 Increase rate ValuePercent Total10,67620,641100.093.9 Clothes and fashion1,5833,52417.1122.6 Travel1,6042,66812.966.3 Household appliances1,7862,68313.050.2 Computer1,0272,0359.998.1 Cosmetics5871,1045.3154.6 Books4961,0305.0107.7 III. Transaction Value by commodity (Unit : billion won)

11. 11 III. E-commerce in Korean CPI  Survey Availability Items and Internet shopping malls Each product has its own popular shopping malls Pretest for 6 months and check survey availability

12. 12 III. E-commerce in Korean CPI  Different price trend T-test of the means and variance between the prices of the Internet shopping malls and local stores Exclusion items which have the same trend

13. 13 III. E-commerce in Korean CPI  Weight Households Income and Expenditure Survey could not provide information the goods are purchased by the on-line or off-line The PSD computes the weights of items for e- commerce by Wholesale and retail trade survey and E-commerce and cyber shopping survey

14. 14 Commodity GroupValue (A)Value (B)(B/A)*100 Households appliances18,2022,46613.5 Books5,9891,13719.0 Cosmetics8,32991711.0 A : Wholesale and retail trade survey B : E-commerce and cyber shopping survey (Unit : billion won)

15. 15 III. E-commerce in Korean CPI  Index The PSD weights the two relative prices to produce the item index Internet shopping malls & local stores Refrigerator index Internet shopping : 120.5 Local stores : 130.4 130.4 =120.5*0.135 + 130.4*0.875

16. 16 IV. Conclusion  Finalize the items and weights for e-commerce in December 2010  E-commerce’s impact on the CPI will be increased in 2010 rebase because of more items and weights

17. 17 Thank you for your attention & Welcome any question