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Statistical processing

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

nel@dst.dk

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Producer and Import Price Index for Commodities

Approximately 6800 prices from selected producers and importers in Denmark. Of these, approximately 3600 price reports for calculation of Producer Price Index for Commodities, approximately 3200 for calculation of Import Price Index for Commodities and approximately 5200 price reports are used to calculate the Price Index for Domestic Supply. The prices are validated automatically in connection with the collection. Unusually large price developments are subsequently checked manually. The validated price developments are then aggregated in a hierarchical system, where they are given weight according to their significance to the overall price index.

Source data

Approximately 6800 prices are collected each month. Of these, approximately 3600 prices are used for calculating the Producer Price Index for Commodities and approximately 3200 for calculating the Import Price Index for Commodities and approximately 5200 prices to calculate the Domestic Supply Price Index.

The sample of approximately 6800 prices are distributed over approximately 1100 item groups. These product groups are selected so that they cover a minimum of 70 percent of the total turnover value for the target population. Within each of these product groups, the largest companies are selected (top-down), based on revenue value. By selecting the largest companies within a given product group, it is assumed that as per basic market theory these larger companies, as price influencers, have both a large direct share or transactions but also an even larger indirect representativeness which helps to ensure a representative sample for the entire product group. Each of these companies is requested to select their most representative commodities, i.e. those products that most represent their sales and/or purchasing behavior within a given product group. In order to match the sales balances in the national accounts, only prices are collected from companies that have production or import value within the specific product groups.

Each selected company is determined by their legal entity registration. In Denmark's Statistics Business Statistical Register, the legal entities are determined by their CVR number. In cases where a company has multiple CVR numbers sharing the same activity these can be combined into one unit from which prices are collected, for example, franchises. The companies must, as far as possible, report the price in force on the 15th of the month. If no price information is available for the 15th of the month, an appropriate day earlier in the month or an average of the prices for the first 15 days of the month can be utilized. For industries or products with high variation within the month – an average price for the whole month is instead preferred.

Weights for aggregation purposes come from the National Accounts product balances for 2018, based on several internal primary sources (companies' purchases and sales, industry production and revenue, retail trade and foreign trade statistics etc). This covers the main part of all trading in the first turnover stage in Denmark, within the delimitation of the purpose of the statistics. Companies under a defined size are not included in the national accounts of the national accounts.

Frequency of data collection

Monthly.

Data collection

Prices are collected via a digital reporting form at Virk.dk.

Data validation

The first validation of price data happens when prices arrive at Statistics Denmark. Here they are validated automatically for specification changes and large movements. Prices movements that are greater than a predetermined threshold are automatically flagged and subsequently manually checked and accepted only if companies can confirm the change. When all prices are received, a list of all price changes is generated, as well as an overview of how these changes impact the indices. The last validation is a manual inspection of all calculated indices, where index movements over a longer period, and in different markets, are reviewed to ensure that any atypical developments are also investigated.

Data compilation

The Producer and Import Price Index for Commodities are calculated in a hierarchical system, where the prices collected are divided into a number of product groups based on the six-digit CN commodity nomenclature, so-called elementary aggregates (EAs). The EAs are the most detailed groups of commodities. Each period an average current period price is calculated and compared with the previous period using a geometric mean of matched observations. The aggregate price development is used to update the index level of the EA and corresponds to the total price development for a given six-digit CN group.

Subsequently, EAs are aggregated together using a Laspeyres-type index (weighted arithmetic mean), where the composition of the commodity basket remains fixed between reference period and current period. In a Laspeyres-type index the price reference period does not coincide with the weight reference period. The price reference period is the period you compare the current period's prices. The weight reference period is the period that the weights are from. Typically the weights reference period comes before the price reference period due to data availability constraints.

This calculation is explained in more detail in the publication Index Calculations in Statistics Denmark (Indeksberegninger i Danmarks Statistik).

Weights are assigned to every detailed group of commodities(EA) and used for weighting the base indices together for sub-indicies and for the total Producer and Import Price index for commodities.The weights, based on the National Accounts for 2018, is equal to the sum of the import values ​​and the production values ​​for the domestic market excl. VAT and excise duty. Where non-response is experienced for essential commodities, imputation is used in which the price development of known observations is used to represent missing observations (class mean imputation). In other cases, prices are considered unchanged (carry-forward method).

The monthly non-response rate is less than 1 percent and is not considered a significant source of error.

Adjustment

There are no corrections of data in addition to what has already been described in data validation and data processing.