Philippines - Producer Price Index (PPI)





Philippines: Producer Price Index (PPI)

Mnemonic PPI.IPHL
Unit 2000=100, NSA
Adjustments Not Seasonally Adjusted
Monthly 0.38 %
Data Jul 2019 135.25
Jun 2019 135.77

Series Information

Source Philippine Statistics Authority
Release Producer Price Index
Frequency Monthly
Start Date 1/31/1993
End Date 7/31/2019

Philippines: Price

Reference Last Previous Units Frequency
Consumer Price Index (CPI) Aug 2019 120.4 120.2 Index 2012=100, NSA Monthly
Producer Price Index (PPI) Jul 2019 135.25 135.77 2000=100, NSA Monthly
Wholesale Price Index Jun 2019 258.9 262.8 Index, 1998=100, NSA Monthly

Release Information

The Producer's Price Index (PPI) for Manufacturing is a composite figure of producer's prices of representative commodities included in the market basket.

The PPI serves various purposes, the most important of which are the following:

a. to measure monthly or yearly changes in the producer's price of key commodities in the manufacturing sector
b. to serve as deflator to Value of Production Index (VaPI) in the estimation of the Volume of Production Index (VoPI), and
c. to serve as deflator in the estimation of manufacturing production in real terms (at constant prices) in the system of national accounts.

2.1. Introduction

The National Statistics Office generates the monthly Producer's Price Index (PPI) for Manufacturing simultaneously with other indicators generated from the MISSI such as the Value of Production Index (VaPI), Volume of Production Index (VoPI), capacity utilization rate, among others, to better measure the performance of the industry.

 

Studies on the generation of the Producer's Price Index (PPI) started in 1980 when the Index of Physical Volume of Production series prepared by the then Central Bank of the Philippines (now the Bangko Sentral ng Pilipinas) was discontinued. This came about because of the transfer of responsibility of operations and processing of the Monthly Survey of Establishments (MSE) for manufacturing from the Central Bank to the National Census and Statistics Office (now the National Statistics Office-NSO).

 

Work on the original PPI started with 1978 as the base year which was later revised to 1985. Since it was felt that the components of the PPI were no longer reflective of the prevailing production structure of the manufacturing sector, the PPI operations were halted.

 

The compilation of the PPI with 1992 as the base year was revived in a project "Improvement of the Producer's Price Index of Selected Manufactured Products" through the Grants-in-aid Program of the National Statistical Coordination Board (NSCB). From 1992 to 1993, the NSO with guidance from the Technical Committee on Price Statistics of NSCB worked for further improvements to the PPI to make it more reflective of the actual situation of the industry. Later in 2001, the office released the rebased series of PPI with 1994 as the new base year.

2.2. Uses of Producer's Price Index

The Producer's Price Index (PPI) for Manufacturing is a composite figure of producer's prices of representative commodities included in the market basket.

The PPI serves various purposes, the most important of which are the following:

a. to measure monthly or yearly changes in the producer's price of key commodities in the manufacturing sector
b. to serve as deflator to Value of Production Index (VaPI) in the estimation of the Volume of Production Index (VoPI), and
c. to serve as deflator in the estimation of manufacturing production in real terms (at constant prices) in the system of national accounts.
2.3. Weights Used

The weights used for the computation of the 2004 PPI were based on Value of Production from the 2000 Census of Philippine Business and Industry for Manufacturing (reference year 1999).

Since the PPI is of the Paasche-type, the weights are continuously revised upon availability of the latest data from the annual survey or census. The revision of the weights are, however, instituted only at the beginning of each year (starting January) and are used for the entire year.

2.4. Market Basket and Sample Establishments

The PPI market basket consists of selected representative commodities which are produced by sample (large) manufacturing establishments in the country. Classification of these commodities is by industry group (4-digit PSIC).

 

2.4.1. Criteria for Selection of Commodities and Sample Establishments

The major criteria adopted in the initial selection of commodities for the market basket are as follows:

a. the commodity has relatively high market share
b. the commodity was available in the market in 1994, this being the base year
c. the commodity is currently being produced, and
d. the market share of the commodity has been stable for the last three (3) years.

In the same manner, criteria were also set for the selection of establishments, as follows:

a. the establishment has an ATE of 50 and over
b the establishment has relatively high concentration ratio
c. the establishment is good respondent in past and current surveys of NSO; that is, it submits prompt reports and provides quality data, and
d. preferably, the establishment is a sample of the MISSI. Refer to Table 8 for the number of selected commodities and sample establishments for the years 2001 to 2004.
2.5. Updating of Sample Commodities

The number of sample commodities covered in the PPI are updated at the start of each survey year in order to make the commodities more representative of the industry. This is done by including new commodities not previously in the market basket and deleting those whose manufacturers have ceased operation or were on strike during the previous year. Also deleted from the list are commodities whose manufacturers are considered as delinquent respondents during the previous survey year.

2.6. Base Year

The latest series of the PPI has 1994 as the new base year in which the average monthly producer's prices of commodities are based.

 

The earlier series had 1992 as the base year and was continued until December 2001, then permanently discontinued in 2002.

2.7. Source of Data

A Producer's Price Survey (PPS) is conducted monthly by the NSO to collect monthly producer's prices of sample commodities. For the year 2004, the survey covered 551 sample commodities produced by 237 manufacturing establishments nationwide.

2.8. Questionnaire Form and Content

A shuttle type questionnaire is used to collect data on producer's prices of commodities. This approach reduces cost and enhances consistency and accuracy in reporting since the respondent establishment is provided with a running account of all monthly responses for the year.

The following items of data, appearing in the questionnaire shown in Attachment 1, are gathered from the respondent establishment:

  • Name of Product/s
  • Brand Name
  • Product Specification
  • Unit of Measure
  • Producer's Price/s of Selected Product/s
2.9. Data Collection

Distribution of the PPS questionnaires, as well as the MISSI questionnaires, to sample respondents is done only once at the start of each year by NSO field personnel. Between the 10th to the 30th day of each month after the reference month, a field staff of NSO visits the sample establishments and copies the data from the establishments' file to his own copy.

 

Data supplied by the establishments are then furnished the NSO Central Office (Industry Statistics Division). The subject matter specialists then copy the data to their own copy of the questionnaires. Altogether, three copies of each questionnaire type for each establishment are prepared: one for the establishment, the other for the NSO field staff and another for subject matter specialists.

2.10. Data Processing

Editing and validation of producer's price data of commodities are done manually. Computation of the price relatives and indices at the industry class and industry group (4-digit and 3-digit 1994 PSIC) are computer generated.

 

For timeliness of dissemination, preliminary indices are generated on a pre-determined cut-off date, usually (eight) 8 weeks after the reference month. Data of non-responding establishments are estimated based on established imputation methods, i.e. historical imputation. The imputed figures are revised upon receipt of late reports of establishments. In many instances, the final data corresponds to a collection rate of over 95 percent.

2.11. Methodology

The procedures used in the computation of the Producer's Price Index are as follows:

 

The industry class level (4-digit PSIC)

The PPI at the 4-digit PSIC is simply the unweighted arithmetic mean of the price relatives of the commodities representing the industry class and multiplied by 100.

 

The formula for PPIij is modified such as that the average monthly price relative of the commodities in the industry class is multiplied by the previous month PPI at the 4-digit PSIC to obtain the current month PPI. That is,

 

The latter formula is especially useful when new commodities enter into market basket as replacements/additions. The base year prices of these commodities need not be obtained as the alternative then is to make available the previous month producer prices of the new commodities to allow the computation of the price relative, phm / phm-1.

The industry group and division levels (3-digit and 1-digit PSIC)

The Producer's Price Index for manufacturing at the 3- and 1-digit PSIC is obtained as the weighted harmonic mean of the component price indices.

 

Computation of Growth Rates

Growth rates are computed to show the changes in the index over two points in time, i.e. month-on-month and year-on-year.

 

Computation of Contribution to Overall Growth Rates

Contributions to overall growth rates are computed to show the relative share of increases/decreases of the major sectors to the total manufacturing sector.

 

2.12. Limitation of Data

The users of data are advised to be particularly cautious in interpreting and analyzing the PPI results. A careful understanding of the methodology and concepts used is necessary to avoid undue misinterpretation of the data.

2.13. Definition of Terms

Base year is the year chosen as reference on which the movement in values of the current year is compared and at which the index is taken to be equal to 100.

 

Commodities are goods normally intended for sale in the market at a price that is designed to cover the cost of production.

 

Market Basket for the PPI refers to the list of sample commodities produced by the manufacturing establishments.

 

Laspeyre's Index is an index number using weights of the base period.

 

Paasche's Index Index is an index number using weights of the current period.

 

Price relative is the ratio of price during current period to the price during base period.

 

Producer's price is the unit price (ex-plant) of the commodity as it leaves the establishment of the producer. It includes any indirect tax or subsidy levied/received on the commodity before it leaves the establishment.

 

Net sales/revenue refers to the value of shipments of products manufactured by the establishment, net of discounts, allowances and returned goods. Inter-plant transfer and goods transferred from one establishment to another establishment are valued as though sold.

 

Value of Production refers to the value of products manufactured. Valuation is at producer's price, that is, the establishment price charged to the customer. It includes all duties and taxes on the products when they leave the establishment.

 

Capacity utilization is the ratio of output to the maximum rated capacity. Rated capacity refers to the largest volume of output possible at which the factory can operate with an acceptable degree of efficiency taking into consideration unavoidable losses of productive time (i.e. vacation, holiday and repair to equipment) and availability of raw materials.



Revisions are produced periodically, in monthly frequency.