Survey FrameworkSession III – Implementation of Price Survey

on Household Consumption products

ICP-Africa Regional WorkshopPretoria, South Africa

20 - 24 June 2011

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Copyright 2011, The World Bank Group. All Rights Reserved

Outline

1. Dimension of geography 2. Products to be priced

a. Selecting the products: important or less importantb. Product specificationsc. Number of products to be pricedd. The global core list and the regional lists

3. Timeframe of survey

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Copyright 2011, The World Bank Group. All Rights Reserved

RuralUrba

nRuralUrban

1. DIMENSION OF GEOGRAPHY

Region A

City A

City B

Town A

Village A

Region B

City C Village C

Stratifying a country

Country / Economy A

Obtain average national prices covering expenditures throughout the economic territory of the country.

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City / Town / Village / etc.Shopping District A

Outlet Type A Outlet Type B Outlet Type C

Shopping District B

Outlet Type A Outlet Type B

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Location of Outlets

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Guidelines for the Selection of Outlets

The selection of outlets should take into account•The different types of outlets•Their relative share of the overall expendituresConsiderations for the selection of outlets

Volume of their sales

Variability of their prices

Location Number of outlets per outlet type

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Outlet Types

Outlet type Examples

Large shops Supermarkets, hypermarkets, department stores

Medium and small shops Minimarkets, kiosks, neighborhood shops, grocery stores, convenience stores

Markets Open markets, covered markets, wet markets

Street outlets Mobile shops, street vendors,

Bulk and discount stores Wholesale stores, discount stores

Specialized stores Supply stores, hardware stores, furniture stores

Private service providers Taxi cabs, hotels, restaurants, private schools, private hospitals

Public or semipublic service providers

Water suppliers, electric power companies, public schools, public hospitals

Other kinds of trade Online (Internet) shopping sites, catalog orders

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Copyright 2011, The World Bank Group. All Rights Reserved

2. PRODUCTS TO BE PRICED

a. Selecting the products: important or less important

ICP 2011: Within each basic heading for the household consumption expenditure, countries will be asked to indicate whether each product is IMPORTANT or LESS IMPORTANT.

Country A Availability Importance

Code Basic heading and product nameAvailable = 1 Important = 1

Not available = 0 Less important = 0

1.Bread and cereals    1101111 Rice 7  1101111.01 Long grain rice, parboiled 1 11101111.02 Long grain rice, nonparboiled 1 01101111.03 Long grain rice, family pack 0  1101111.04 Jasmine rice 1 01101111.05 Basmati rice 1 1

Intra-country point of view

Important products: Products whose expenditure share in the basic heading is large.

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Important

Less importa

nt

Important

Less importa

ntProduct 1

Product 1

Product 1

Product 1

Product 2

Product 2

Product 2

Product 2

Country A Country B

Intercountry / regional point of view

Country A is required to price Product 2, even though it has classified the product as less important, in order to provide links with other countries that have classified the product as important, such as Country B—and vice versa for Product 1.

Expenditure share

Expenditure share

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Three guidelines to determining whether a product is important:

1. Is it in the CPI? 2. Use own judgment or common knowledge 3. Ask the experts

The experts, mostly shopkeepers , can answer the question, because the success of their businesses depends on knowing which products are best -sellers and which are bought less often.

National coordinators may know whether a product is IMPORTANT (that is, it has a large expenditure share in the basic heading) from his or her own knowledge.

How to Determine Whether a Product Is Important

If a product is the same as, or similar to, a good or service included in the CPI, IT IS IMPORTANT.

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Notes for Determining Importance

Notion of what is important--it’s WITHIN a basic heading (BH)

•Note that “large” and “small” relate to the basic heading.It is possible that the basic

heading “Wine” has a smaller expenditure share compared with other basic headings.

Still, specific wine product(s) should have a large expenditure share (= important) within the basic heading.

If compared with other BHs

If compared within the BH

Copyright 2011, The World Bank Group. All Rights Reserved

2. PRODUCTS TO BE PRICED

b. Product specifications

What is the SPD (structured product description) approach?

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Examples of product list using SPD approach (basic heading of “Fresh milk”)

1101141 Fresh milk Number of units

Unit of measurement

Min Max Brand Packaging Processing Fat content

110114101 Milk, un-skimmed Pasteurized

1 Liter 0.8 1.5 Well known Pre-packed; carton Pasteurised; HTST (High Temperature/Short Time) 

treatment 

Natural (3-4%)

110114102 Milk, un-skimmed UHT

1 Liter 0.5 1.5 Well known/National/Regional Brand

Pre-packed; carton Ultra High Temperature (UHT) Natural (3-4%)

Quantity Packaging Product characteristicBrand nameCode Name

Common for the basic heading

Values of individual product

(Classification Valuables)

Structured product descriptions are designed to clearly define the products to be priced.

Values of individual product

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2. PRODUCTS TO BE PRICED

c. Number of products to be priced

Small number

of samples

Large number

of samples

• More precise!

• But costly…

• Less precise…

• But feasible!

What, then, is the optimal number of products to be priced?

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Determining the Number of Products (1)

The relationships of the following are used to evaluate the number of products:

1. The relative standard deviations

2. Target levels of precision

The optimum: Enough products that the sampling error of the basic heading PPP based on the product PPPs is within a target level of precision.

The greater the variance (deviation)   the lower the level of precision 

• a larger sample size is needed

to achieve target precision

The smaller the variance (deviation)  the greater the level of precision

• a smaller sample size is okay

to achieve target precision

Therefore,

Therefore,

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Determining the Number of Products (2)

The number of products to be priced under each basic heading depends on

The price variability of

the basic heading

The relative importance of

the basic heading

The degree of overlap of

products across countries

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Copyright 2011, The World Bank Group. All Rights Reserved

2. PRODUCTS TO BE PRICED

d. The global core list and the regional lists

*We will learn the approaches in Module 8.

(Selected) GCL items

(Selected) GCL items

(Selected) GCL items

(Selected) GCL items

(Selected) GCL items

(Selected) GCL items

ICP 2011 - Core List Approach 601 core items

Each country is expected to price 100-300 of the 601 GCL items in their regional list.

A m a l g a m a t e d r e g i o n a l l i s t s

Global Office

Regional coordinat

ors

National coordinat

ors

Global Core List (GCL)

2011 globalcore listUsing SPDs (structured product

descriptions)

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2011 amalgamatedregional list

Amalgamated Regional Lists – How they were developed

First regional draft list

ICP 2011 Global Core List

Perfect matchComparable

ExclusiveExcl

usiveCOMBINE

- No duplication- Align characteristics

         Code Basic Heading & Product name    1.09.2.01.1 Major durables for outdoor recreation  

 

110921101  6-String Basic Acoustic Guitar for Beginner 

<-- Global core items

 110921102  Portable Electronic Keyboard <-- Global core items

 110921103  Outboard engine <-- Global core items

 110921104  Inflatable boat <-- Global core items

 110921105  Bongo drum <-- Regional items

 110921106  Tambourine <-- Regional items

     

Finalize

This process was carried out through • Exchange of e-mail• Regional workshops

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3. TIMEFRAME OF SURVEY

Average national prices throughout the year as a whole.

Period – the target year (2011)

Frequency - usually quarterly

Timing

Scheduling

Factors in the timeline for the survey