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Accuracy and reliability

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Prices and Consumption, Economic Statistics
Nicklas Elversøe
+45 3917 3142

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Producer and Import Price Index for Commodities

The sample contains 6800 prices from Danish manufacturers and importers. The most important enterprises within selected areas are requested to report prices. In this way it is ensured that the producer and import price index covers at least 70 percent of Danish production and imports. It is therefore assumed that price developments in the sample represents the price movements in the population.

Overall accuracy

Prices are collected for approximately 1100 groups of commodities covered by approximately 6800 price series. The samples for each commodity group are selected top-down to achieve as high turnover coverage as possible. It is assumed that the price developments in the samples expresses the price developments in the whole population. Since the focus is on covering as much turnover as possible, rather than reflecting typical price developments as in the Consumer Price Index, the indices may as deflators move in slightly different directions than pure price indices.

Sampling error

The samples for each commodity group are selected top-down to achieve as high turnover coverage as possible. The samples are thus not based on the probability of sampling selection corresponding to the importance of each commodity. To match the turnover balances in the National Accounts, prices are strictly collected from companies within the specific six-digit commodity groups. The sample is therefore not a random sample and it is not possible to estimate the overall size of the sampling error.

Non-sampling error

Inaccuracy in weights: The weights, which are based on the supply and use tables from national accounts for the year 2016, are equal to the sum of the import- and production values for the home marked. The current weights were implemented by the publication of the index for January 2020. There is this a constant lag in the weights used of at least four years.

Quality change bias: As time passes, the commodities in the sample gets replaced. Because the new commodities often have different quality than the commodities that they replace, there is continuous quality adjustment of the index. When replacing commodities, new commodities are not included in the index before their prices are observed in two subsequent periods. A bias can arise in cases where price changes coincide with changes in quality. Methods for dealing with quality changes are described in IMF's guide for Producer Price Index for Commodities (Producer Price Index Manual - Theory and Practice).

Maintenance of the basket of goods: There might be a tendency towards keeping commodities that are out of fashion too long in the sample. The enterprises are regularly asked to update the basked of goods.

Response errors: Errors may occur when an enterprise report prices for other commodities than expected. The reason for this is normally misunderstandings e.g. change in staff.

Recording errors: Errors may occur when questionnaires are recorded in Statistics Denmark. Our error checking procedures normally spot such errors. Recording errors are not regarded to be important.

Quality management

Statistics Denmark follows the recommendations on organisation and management of quality given in the Code of Practice for European Statistics (CoP) and the implementation guidelines given in the Quality Assurance Framework of the European Statistical System (QAF). A Working Group on Quality and a central quality assurance function have been established to continuously carry through control of products and processes.

Quality assurance

Statistics Denmark follows the principles in the Code of Practice for European Statistics (CoP) and uses the Quality Assurance Framework of the European Statistical System (QAF) for the implementation of the principles. This involves continuous decentralized and central control of products and processes based on documentation following international standards. The central quality assurance function reports to the Working Group on Quality. Reports include suggestions for improvement that are assessed, decided and subsequently implemented.

Quality assessment

There are large differences between the commodity- and industry groups that the Producer and Import Price Index for commodities covers. There is great variation in the number of companies from group to group. In some groups it is possible to cover a large amount of turnover with a small sample, whereas in others, it is difficult to cover a small amount of turnover even with a large sample. Hence it is not possible to determine a common quality benchmark across all groups.

A comprehensive quality assessment is therefore based on a combination of assessing turnover coverage, the number of companies and prices in the sample and the quality of the collected prices, including the pricing methods used. The quality of the statistic is being continually monitored and improvements are made where it is assessed that the quality can be levered. Conducting quality work therefore includes making replacements within- and increasing the sample with more respondents. Asking existing respondents to report more prices, or use better pricing methods to define and calculate prices.

Data revision - policy

Statistics Denmark revises published figures in accordance with the Revision Policy for Statistics Denmark. The common procedures and principles of the Revision Policy are for some statistics supplemented by a specific revision practice.

Data revision practice

Only final figures are published.