Paul J Crowley

Head of Prices & International Relations

Central Statistics Office Ireland

Purpose of Presentation1. To examine the need for an EU wide study of

price comparisons2. If there is such a need – can it be met?3. Show how a more limited approach worked in

the case of Ireland4. Illustrate what other information is available to

consumers5. Discuss the proposed methods to derive

detailed prices6. Consider the better use of existing data

Detailed Prices2 Drivers

(1)Average price data required for product & market monitoring

(2)Publication would serve to improve HICP Communications –> proof official inflation covers products/services people buy

However arguments to support these propositions ->weak

Product & Market MonitoringAssumption efficiency of single market ->

priceconvergence

However markets are different-> different levels of income -> different levels of direct & indirect taxation-> different standards of living-> different consumer tastes & patterns-> not homogeneous –

types/sizes/brands/quality

Product & Market MonitoringDirect comparison – items must be

comparable withrespect to size, quality, popularity and available

in eachMS -> examples – Coca Cola, Big Mac, Petrol,

Cinema

Problems – Clothing – style, quality, brand, outlet

Example – cup of coffee (include service charge, table

service, 1 cup) €2.26 Austria €0.37 Bulgaria – description

is too loose – multiple types

1st of Experimental Results - HICP->Data gaps – countries missing->Issues of comparability ->Range of prices (lowest & highest)->Unit conversion (KG) – unit but not an

average price-> ignores - outlets/tight vs. loose specifications

Quality –> data fails to meet the strict requirements

Presents more questions than answers Question the validity of results ->

‘meaningless’ & ‘questionable’

Quality & Comparability‘Comparability is important up to a certain degree….products can be considered sufficiently comparable if they are perceived by consumers as equivalent and substitutable’ -Eurostat

Fundamentally disagree with this statement

Objective is to compare prices -> prerequisite -measure or compare the same items -> impact on quality/accuracy & reliability

Case Study - IrelandIreland - island nation separated from rest of

Europe

But border frontier with Northern Ireland (UK) – cross

border trade

UK (including NI) main reference wrt price levels – media

European prices – holidays (alcohol, eating out)

Ireland -Retail

Up to 2008 - rapid economic growth, growth - employment,

incomes, standard of living, influx of UK multiples

Media reporting of price comparisons between Ireland

‘south of border’ and NI ‘north of border’ – specifically

Tesco which operated north & south – price variation

People ‘voted with their feet’ and travelled North Impact – price war, UK sourcing, advertising, cheaper

prices

Retail – Other examples

(1)UK Multiples £sterling vs. € price £50 - €75 (€55)

(2)North South Price Comparisons – Dental/Car Mainten

(3)Prescribed Drugs – Spain – National Radio

(4)Eating out/Alcohol – holidays – price comparisons

Other sources of information(1)Media – price comparisons – ‘Rip Off culture’(2)National Consumer Agency – price surveys of

supermarkets(3)Revenue Commissioners – north/south survey

of alcohol/tobacco/motor fuel – excise duties(4)Private websites – www.valueireland.ie - 78

different sites(5)UBS Prices & Earnings Survey – time per hr(6)Comreg – regulator – www.callcosts.ie(7)AA – petrol & diesel prices – eu comparisons

Role of the HICPMeasure the evolution of prices & not to

produce absolutemeasure of average prices

Experts (HICP WP) – fundamental issues with use of HICP as the mechanism to create detailed prices

Lack of comparability makes it impossible to produce robust, reliable and quality comparisons

National Baskets - national competence/national consumer tastes & patterns – not comparable across the entire EU – for neighbouring countries

-> virtually impossible to make direct comparison across EU except where product/service is identical e.g. can of Coca Cola

Alternative SourcesPPPs - more suitable - significant activity – comparability &

represenativity - MS price same or similar ‘representative’

item - results – validation across EU -> But recognise there are difficulties - 3 year

cycle/Capitals

Integration of PPPs and HICP – difficulties & issues

Alternative sources including private sector – resources &

cost benefit

Detailed Prices – Are they required?

Currently quality data does not exist

Is there a perceived or actual need? – who determines this?

DG SANCO identifies the need for hundreds of products -

this will never be met

Danger in ‘contaminating’ HICP by modifying, changing,

adding product descriptions – must be reflective of national patterns

Detailed Prices – Are they required? 2

Consumers - ‘passing reference/interest’ but unlikely to

travel to Bulgaria to avail of Coffee which is a fraction of the

Irish price

-> more important is value and price comparisons within

the national territory – which supermarket is better value,

better choice and has special offers – advertising/own

experience

Discerning consumer–awareness/shop around –better value

ConclusionQ How much can be achieved by making better use of existing

data?

- Better use & explanation of PPPs (PLIs) – overall comparison of price levels

- Increase understanding of HICP/CPI and maximise use of existing data

- Supplement with range of alternative sources (media/www/regulators)

Q Integration of HICP/PPPs

- No significant value in integration

Q When and where can current data collected be supplemented by other sources?

- By who , costs & benefits