a weekly commodity price index

A Weekly Commodity Price IndexAuthor(s): Joseph L. SniderSource: The Review of Economics and Statistics, Vol. 7, No. 4 (Oct., 1925), pp. 248-251Published by: The MIT PressStable URL: http://www.jstor.org/stable/1928131 .

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A WEEKLY COMMODITY PRICE INDEX JOSEPH L. SNIDER

T HE present paper describes a weekly index of wholesale commodity prices which has

recently been constructed for current use in the Harvard Economic Service. The index numbers for 1924 and I925 are presented in the accom- panying table and chart.

In brief, the index is an aggregate of 48 price series, weighted by the quantities marketed in I919, and expressed relative to the aggregate for the year I9I3. It is designed to record weekly price changes as accurately as the index of the Bureau of Labor Statistics records monthly changes. In large measure the same statistical methods and data have been utilized in the two indexes.

It was quite clear, because of the difficulty of securing quotations and the labor of combining them, that a weekly index could not include as many series, 404, as are included in the B. L. S. monthly index. Consequently, a representative

selection was made from the B. L. S. list of series. In making this selection charts were constructed, covering the period I92I-24, of approximately one third of the most important series, import-

CHART I. -INDEX OF WHOLESALE COMMODITY PRICES: WEEKLY, I924-25

(Prices in the year I9I3 = IOO)

t15

145 14C Ak

TABLE I. - INDEX NUMBERS OF WHOLESALE COMMODITY PRICES: WEEKLY, I924-25

(Prices in I9I3 = IOO)

I2924 I92

Week Index Week Index Week Index Week Index Week Index Week Index

Jan. 8 I50.9 May 6 I46.2 Sept. 2 I45.3 Jan. 6 I52.7 May 5 I49.7 Sept. 2 I54.6

I5 I50.5 I3 I44.6 9 I45-5 I3 I52.4 I2 I50.I 9 I54.9

22 15I.2 20 I45.0 i6 I45.5 20 I52.6 I9 I48.8 i6 I56.3 29 I50.8 27 I44.3 23 I43.0 27 I53.3 26 I48.4 23 I57.7

30 I44.3 30 I56.2

Feb. 5 I52.6 June 3 I43.3 Oct. 7 I46.8 Feb. 3 I53.9 June 2 I50.4 Oct. 7 I55.4 I2 I53.I I0 I42.0 I4 I47.0 I0 I54.6 9 I5I.9 I4 I53.6

19 I52.5 I7 I40.7 2I I46.I I7 I54.2 i6 I5I.4 2I I54.I

26 I5o.8 24 I40.0 28 I45.6 24 I55.3 23 I53.8 28 I53.I

30 I54.3

March 4 I50.I July I I4I.4 Nov. 4 I45.6 Mar. 3 I57.4 July 7 I55-6 Nov. 4 .... II I49.7 8 I4I.8 II I46.4 I0 I58.8 I4 I56.2 II ....

I8 I48.9 I5 I42.3 i8 I46.9 I7 I57.6 2I I58.i i 8 ....

25 I48.6 22 I43.8 25 I47.I 24 I57-0 28 I58.9 25 .... 29 I48.2 3I I54.0

April I I46.6 Aug. 5 I47.7 Dec. 2 I48.5 April 7 I52.7 Aug. 5 I59.4 Dec. 2 ....

8 I47.7 I2 I46.6 9 I49I I4 I53.2 I2 I59-4 9 ....

I5 I48.9 I9 I47.2 i6 I49.2 2I I50.9 I9 I57.0 i6 ....

22 I47.5 26 I46.3 23 I5I.3 28 I50.0 26 I55.9 23 ....

29 I46.I 30 I53.I 30 ....

[ 248 ]



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250 THE REVIEW OF ECONOMIC STATISTICS

ance being determined on the basis of values (price times quantity) in I922. A few monthly series from other sources were also plotted. It was found possible to construct a monthly index composed of 66 series which approximated the B. L. S. index of 404 series very closely for the period I92I-24. Some of the 66 series were weighted to represent two or more related series of the B. L. S. list, so that the 66 series, as weighted, represent 65 per cent of the total value in I922 of all the series in the monthly B. L. S. index.

Although the 66 series were well adapted to form a monthly index, similar to that of the Bu- reau of Labor Statistics, it was necessary or seemed desirable, in selecting series for the weekly index, to make numerous substitutions and omissions. The series finally selected for the weekly index, 48 in number, therefore constitute to a large extent an independent list of series. They are briefly described in the first column of Table 2.

One of the distinguishing characteristics of the weekly index is the inclusion among the series of eight average or composite prices. The finished steel series is the lIon Age composite price of 7 different classes of finished steel, embracing 88 per cent of the United States output. The pig- iron series includes both basic and foundry iron, the foundry being an average of quotations in three different markets. The bituminous coal series is the Coal Age average of I4 coals, repre- senting nearly go per cent of the United States output. The prices of raw wool, worsted yarn, cotton yarn, and cotton goods used in the index are the Fairchild averages, published in the Daily News Record. The raw wool series includes 8 different grades of domestic wool, and the worsted yarn series is an average of I5 different numbers. The cotton yarn series includes 4 different numbers, and the cotton goods average includes 36 items of gray and finished cloth. The crude oil series is an average price of 6 gravity classes. Therefore, although the index is com- puted from 48 series, it includes in a very real sense approximately I35 series.

The prices are taken for the most part from standard trade publications, but in several in- stances are secured directly from manufacturers and trade associations. The source of each series is given in column 2 of Table 2.

The prices of the individual commodities apply to different days of the week, and in several cases are averages of daily quotations. Approximately one half of the prices apply to Tuesday. A weekly average of daily prices is used for ten commodities which fluctuate appreciably from day to day. These are designated by an asterisk in column 3 of Table 2. Wednesday prices are the latest included in the current computation of

the index, so that the index numbers are designated as of the week ending Wednesday. Prior to August I925 Tuesday prices were the latest included.

As stated above, the index is of the weighted- aggregate type. The weighting consists of mul- tiplying the price of each commodity by the quantity of the commodity produced and marketed in I9I9. The quantity data are for the most part Census figures.1 The series which are

TABLE 3. - MONTHLY AVERAGES OF THE WEEKLY INDEX OF WHOLESALE COMMODITY PRICES COM-

PARED WITH THE INDEX OF THE BUREAU OF LABOR STATISTICS: I924-25

(Prices in I9I3 = ioo)

Monthly Per cent average of deviation of

B. L. S. weekly column 2 from Year and month index index column I

1924 January .. I5I.2 I50.8 - .3 February ... I5I.7 I52.2 + .3 March ... I49-9 I48.8 - 7 April. I48.4 I47.6 - 5 May .1.. . I46.9 I44-7 -I.5 June ....... I44.6 I4I.0 -2.5

July ....... I47.0 I44.0 -2.0

August I49-7 I46.6 -2.I

September . I48.8 I44.6 -2.8 October .... I5I.9 I46.4 -3.6 November I52.7 I46.9 -3.8 December I57.0 I50.7 -4.0

I925 January i6o.o I53-0 -4-4 February ... I6o.6 I55.4 -3.2

March i6i.o I 56.8 -2.6

April ....... I 56.2 I5I.7 -2.9

May ....... I55.2 I49-5 -3.7 June ....... I57-4 I52.8 -2.9

July .1..... I 59.9 I57.2 -I.7

August . 1... . I60.4 I57.3 -1I.9

September I59.7 I56.3 -2.I

1 Given in Wholesale Prices, 1890 to 1922, Buletin 335 of the Bureau of Labor Statistics, from which source our figures are taken.



A WEEKLY COMMODITY PRICE INDEX 251

averages of several prices, such as the Iron Age composite steel price, are weighted by the total quantity assigned to these series by the Bureau of Labor Statistics. A few series also are weighted to represent one or more additional series closely related in physical nature and price fluctuations. The quantities are given in column 4 of Table 2.

The relative importance in the index of the individual commodities is shown by the percent- ages in the last column of Table 2. These per- centages express the ratio of the average value (price times quantity) of each commodity to the average total value of all commodities during the first half of I925.

For comparison with the monthly index of the Bureau of Labor Statistics we have constructed monthly averages of the weekly index numbers, which, together with the B. L. S. index numbers and the percentage differences of our index from the B. L. S. index, are presented in Table 3. The direction of change of both indexes was the same in every month of the period; that is, our index rose in every month in which the B. L. S. index rose and fell in every month in which that index fell. In every month except February I924 our index stood at a lower level than the B. L. S. index. The maximum difference was 4.4 per cent and the average difference 2.4 per cent.



a weekly commodity price index

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