□ The Producer Price Index rose by 1.2% month-on-month in March 2011, or by 7.3% in year-on-year terms. The changes in the major sub-indices are as follows:
o Agricultural, forest & marine products: 0.1% (month-on-month) o Manufacturing industry products: 1.8% (month-on-month) o Electric power, water & gas supply: 0.0% (month-on-month) o Services: 0.2% (month-on-month)
Producer Price Index
( % )
Weight Month-on-month Year-on-year
Dec'10 Jan'11 Feb Mar Dec'10 Jan'11 Feb Mar
A l l I t e m s 1000 0.9 1.6 0.7 1.2 5.3 6.2 6.6 7.3
Agricultural, Forest
& Marine Products 43.6 3.7 9.1 0.4 0.1 21.1 26.6 20.8 16.2
Cereals 11.0 1.9 1.5 2.7 3.6 4.2 5.8 8.4 13.3
Fresh Vegetables 7.4 -3.5 12.7 -5.4 3.9 41.4 47.2 16.8 5.3
Fresh Fruits 5.3 15.7 2.7 -2.1 -4.8 82.9 74.8 67.1 58.4
Livestock Products 12.0 2.9 19.6 0.8 3.5 -3.3 15.2 18.5 19.9
Marine Foods 5.3 2.6 3.6 -0.4 0.0 28.5 19.0 19.8 9.2
Manufacturing
Industry Products 644.8 1.3 1.3 1.2 1.8 6.0 6.8 7.8 9.1
Coke & Petroleum
Products 59.7 4.9 4.1 1.7 6.9 11.3 13.2 16.9 22.1
Chemical Products 55.2 2.2 3.2 3.1 2.8 10.3 11.5 12.5 16.3
Basic Metal
Products 65.6 1.6 1.1 1.7 1.3 17.7 17.9 20.1 20.7
Electronic Components, Computers, Radio, Television & Commu- nication Equipment
93.7 0.3 -0.2 0.3 -0.2 -7.5 -6.4 -7.1 -6.5
E l e c t r i c P o w e r ,
Water & Gas Supply 44.5 0.1 1.8 0.1 0.0 1.5 3.2 3.4 3.2
S e r v i c e s 264.4 0.0 0.7 -0.1 0.2 1.9 1.8 1.9 2.1
Transportation 61.6 -0.1 0.4 0.0 0.1 1.8 2.4 2.5 2.7
Financial Services 27.4 0.7 1.9 -1.3 0.2 5.3 5.2 5.7 4.9
Professional, Scientific &
Technical Services 43.3 0.2 0.7 0.3 0.8 5.7 3.3 3.7 3.9
Other Services 31.1 -0.2 1.6 0.1 0.2 1.0 2.6 2.4 2.7
Producer Price Index during March 2011
A. Producer Price Index
B. Changes
(Appendix)
How the Producer Price Index is compiled
1. Definition and use
― The Producer Price Index measures fluctuations in the price levels of all goods and some services produced in Korea that are traded between businesses in the first transaction stage in the domestic market. The index is used to grasp the supply-demand conditions of these goods and services, and also for business trend indicators, deflators, etc.
2. Frequency
― Goods and services are surveyed once a month, and agricultural, forestry and marine products three times a month.
3. Prices surveyed: The prices charged by producers, i.e. factory prices,
are surveyed.4. Items subject to survey
― For goods and services, the transaction amounts in the domestic market of only those items accounting for more than 1/10,000 of the total transaction amount (or 66.4 billion won) and more than 1/2,000 of the total transaction amount (or 119.5 billion won)
respectively, and those that represent the price fluctuations of items under the same classification are surveyed. Currently, the number of items meeting these requirements is 884--801 items for goods and 83 for services.
5. Method of compilation
― Classification
ㅇ Basic classification: The two categories are goods and services.
These are further classified into twelvesub-categories-- agricultural, forest & marine products; mining products;
manufacturing industry products; electric power, water & gas
supply; transportation; telecommunications; financial services;
real estate activities; leasing and renting; advertising;
professional, scientific & technical services; and other services.
ㅇ Specialized classification: Nine indices fall under this
classification--foods & non-foods; fresh foods & items other than fresh foods; energy & items other than energy; information
technology & items other than information technology; and items other than fresh foods & energy.
― Weight: The share of a select item and items similar to it in the total transaction amount is measured in permillage, and represent the economic importance of items subject to the survey.
No. of Items and Weight of Each PPI Category (as of 2005)
Category # of items Weight
Total Index 884 1,000.0
Basic
Commodities 801 735.6
Agricultural, forest & marine products 55 43.6
Mining products 9 2.7
Manufacturing industry products 728 644.8 Electric power, water & gas supply 9 44.5
Services 83 264.4
Specialized
Foods 131 81.3
Excluding foods 753 918.7
Fresh foods1) 34 16.4
Excluding fresh foods 850 983.6
Energy 20 93.8
Excluding energy 864 906.2
Information Technology 98 175.1
Excluding I T 786 824.9
PPI less fresh foods & energy 830 889.8
1) Comprised of fresh vegetables (15 items), fresh fruits (8 items) and marine foods (11 items)
― Formula: A modified Laspeyres formula which measures price changes weighted by transaction amounts at the base year is adopted to calculate the indices.
― Quality adjustment method: Methods such as direct comparison, linking, production cost and overlap are generally employed to adjust for quality. The Hedonic regression method is applied to products such as PCs whose qualities are quantifiable by objective numeric values.
― Base year: The base year for the current index is 2005. The base year is revised every five years to reflect changes in economic structure, thereby improving the selection of items to be surveyed and their weights.
6. Notes on statistical use
― The purpose of any price index is to measure the trend in price changes, not to present absolute price levels.
― Prices of agricultural, forestry & marine products are those decided after a bidding process in a wholesale market, rather than those at which farmers and fishermen sell their products.
― The PPI may be compared with the consumer price index (CPI), but should not be used to measure margins at the stages of producer and retail sales.
