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3.6. PRICES

Price indices and prices of agricultural products

Producer price index of agricultural products: reflects changes in prices paid to producers for agricultural products procured for processing or further sale, or sold directly to households for consumption (on market), excluding price changes of agricultural products (young animals for breeding) sold between agricultural producers. Indices have been calculated by the Laspeyres type formula weighted with the ratio of sales values in 2000.

Average producer prices:

Price index of means of agricultural production: It contains price indices of products not only industrial but agricultural (e.g. seeds, pesticides) origin. Quarterly data on purchase prices of fertilizers, pesticides, feeding stuffs and veterinary products are collected from retailers and wholesalers. Monthly data are collected from consumer, industrial and construction price indices. The indices are Laspeyres type ones with a base year 2000 and when calculating aggregate indices sub indices are weighted by the values of purchases in 2000. In case of seasonal products (e.g. pesticides) the weighted average price index is calculated using the distribution of the value of purchases during a year.

Terms of trade: Terms of trade figure is calculated by dividing the output price index by the input price index.

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Industrial price indices

The monthly representative price observation concerns almost 1400 economic enterprises and nearly 6000 products. The observed price, in case of domestic sale, is a basic price since 1994, excluding value added tax, and including price supplement belonging to turnover; in case of external trade turnover, it is a price at border parity converted into forint at the actual rate of exchange, valid on the day of fulfilment.

Producer price index: a weighted average of price indices of domestic sales and export sales.

Price index of domestic sales: an index calculated from net price receipts of products sold inland using base periods as weights.

Price index of export sales: an index calculated from the price receipts of products sold directly-, through an agent-, or in a joint venture to external trade using base periods as weights.

Calculation method: as a first step a chain relative number had been calculated by representatives of the respective month. Following this the commodity-group indices were determined as arithmetic means of price ratios, then price indices by branches were calculated as weighted arithmetic means of commodity-group price indices.

Weights are revised annually, based on data of the "Annual statistical survey of industrial production" (questionnaire No. 1039 in the National Statistical Data Collection Programme (OSAP in Hungarian)).

Weights are the value of annual sales of the products/services in a particular product group two years prior to the reference year, in a particular sales direction.

When calculating monthly industrial producer price indices, weights for 2017 are used in every month of 2019.

As weights are changed annually, the change of the weight structure also has an effect on the base indices of aggregates.

Weights for particular years are shown in the attached table: weights.xls

Grouping by use: since 1998 it is done according to the recommendations (on 3 digit level) of the European Union in harmony with special branch classification. From 2000 the EU modified the contain of some groups of MIG (Main Industrial Grouping). From these the most significant change is that the division 41 collection, purification and distribution of water belongs to group Energy producer branches instead of group Intermediate goods producer branches, as before.

The updated branch classification of the Hungarian Standard Industrial Classification of All Economic Activities'98 was introduced in the industrial price index computation in January 1999 and since then industrial producer price indices are calculated on its basis. The HSICEA'98 fully conforms to the EU NACE Rev.1. (4-digit level). From January 2009 the classification is based on HSICEA'08, which is consistent with NACE Rev. 2.

Data suppliers: selected corporations listed to Mining (B), Manufacturing (C), Energy industry (D), Water and waste management (E).

Tables containing fixed base indices (2015=100%) have been methodologically revised. (03.05.2018)

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Construction producer price index

Construction cost based price index: was calculated until 2007, took into consideration the change in the producers' prices of the materials used in the construction and in the earnings of employees on construction.

Construction producers' price index: reflects the average price development of construction activity performed in construction branch. The indices are based on the survey of market prices of selected construction operations.

Price indices by type of building: reflects the average price development of construction operations need to build the given type of construction.

Unit price of the construction operations: the prices of the selected operations, including material and fee prices without VAT. These prices are taken from the entrepreneur fee establishing budgets of the contracts' and contracts modifications' from the reference period.

Calculation method: The basic element of the calculation is the elementary price relative by representatives, which is the quotient of the construction operation's reference and base period prices. From these quotients first we calculate - using arithmetical averages - enterprise indices; subsequently sub-branch and branch indices aggregated from enterprise indices weighted by staff size categories and main groups of construction. The construction price index is computed from the branch indices. Production values from two years before the reference year are used as weights. To compute indices of types of constructions first price indices for each selected operation are calculated as the simple arithmetical mean of elementary price relatives, subsequently the indices of the construction operations are weighted by types of constructions. The weights used for the types of constructions were made to be compiled by specialists, who collected weight proportions from the costs of selected construction projects.

Source of data: data supply of „Prices of construction activities”.

Scope of data suppliers: designated enterprises classified to the construction industry (a total of 900).

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Price index of investment

The price index of investment belongs to the type of secondary indices. Primarily it is used for measuring the volume changes of the investments. The price index of construction, of industrial domestic sales as well as the unit value index of external trade are used for its calculation as primary indices. Weighting is done by the category composition of the performance value in the reference year. Indices have been calculated from data of comparable structure.

Price Indices and Terms of Trade for External Trade in Goods

Upto 2002 for the measurement of the price level changes of the external trade in goods HCSO computed unit value indices. These indices were based on the HUF value of turnover registered in the process of customs clearance and quantity data. Since 2003 the computation of price indices is based characteristically on actual market prices.

The calculation of indices is based on two sources of data.

The selection of representative products and data providers is a concentrated sample selection based on the stratified turnover data of the previous year. In accordance with the export and import turnover by relations the most considerable strata are selected. For these strata representative products are selected at the companies with the highest turnover. Data broken down by countries (for import: country of consigner, for export: country of destination) are provided monthly.

By specifying the representative product, besides the most important price affecting technical parameters we also specify the main price affecting business conditions by country such as payment and delivery terms and the type of currency.

By specifying the representative product, besides the most important price affecting technical parameters we also specify the main price affecting business conditions by country such as payment and delivery terms and the type of currency.

The observed price of the representative product is a unit price of one transaction at border parity, expressed in HUF. It refers to only one transaction of the data provider in the given month with the given country at the agreed terms. This transaction is selected by the data provider from the proper transaction: the date of the transaction is the 15th day of the month or the nearest date.

As a first step of index calculation the monthly indices are prepared on the basis of the same month of the previous year. Indices are aggregated by the Fisher formula, i. e. as a geometric mean of base period weighted Laspeyres and current weighted Paasche indices. Value data of the whole product turnover are used for weighting. Base index series are produced by chaining the indices on basis of which the base indicators of the same period of the previous year can be calculated.

Indices are published by the main commodity groups composed of the product groups of UN nomenclature, the SITC Rev. 3 and by main international organizations and by main country groups.

Revision of data: because of false supply of data and additional informations the data can be corrected retroactively, therefor they can deviate from data published previously.

Terms of Trade: the quotient of export and import price index.

Volume index: it is calculated from the HUF index straining of the influence of Forint price level changes occured from base period to reference period. Volume index is the quotient of value and price index.

Main commodity groups:

I.Food, beverages, tobacco
0Food and live animals
1Beverages and tobacco
II.Crude materials
2Crude materials, inedible (excluding fuels)
4Animal and vegetable oils, fats and waxes
III.Fuels
3Mineral fuels, lubricants and related materials
IV.Manufactured goods
5Chemicals and related products
6Manufactured goods (classified chiefly by material)
8Miscellaneous manufactured articles
9Commodities and transactions not classified elsewhere
V.Machinery and transport equipment
7Machinery and transport equipment

Main international organizations and country groups until April 2004:

Developed countries

Of which:

OECD

European Union

Developing countries

Central and Eastern European countries

Of which:

CEFTA

Main international organizations and country groups from May 2004:

European Union (EU–25)

Of which:

EU–15

new EU-Members

Extra-EU countries

Of which:

OECD

From January 2007 the indices of the European Union are compiled with the data of Romania and Bulgaria so the groups of countries are modified as follows:

European Union (EU–27)

Of which:

EU–15

new EU-Members (EU–12)

Extra-EU countries

Of which:

OECD

Terms of Trade: the quotient of export and import price index.

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Service Producer Price Indices (SPPIs)

Service producer price index: quarterly changes in prices in the below mentioned service activities according to NACE Rev.2

 

The scope of SPPI according to NACE Rev.2

First release in June 2010
49.4Freight transport services by road and removal services
50.1 + 50.2Sea and coastal passenger water transport services
51Air transport services
53.1Postal services under service obligation
53.2Other postal and courier services
61Telecommunications services
62Computer programming, consultancy and related services
63Information services
First release in July 2011
52.1Warehousing and storage services
52.24Cargo handling services
69_702Legal services; Accounting, bookkeeping and auditing services; tax consulting; Management consulting services
71Architectural and engineering services; technical testing and analysis services
73Advertising and market research services
78Employment services
80Security and investigation services
81.2Cleaning services

 

Service producer prices: the services producer price is the amount that the producer receives for services sold to customers, excluding value added tax and similar deductible taxes invoiced to the customer as well as (e.g. transportation, packing, etc.) charges invoiced separately by the producer, but including surcharges and discounts.

Price representative of services: a service item with well delimited parameters of quality relevant in pricing aspects; which represents considerable weight in sales and data on which can be continuously supplied.

Scope of data suppliers: enterprises, which supply the above mentioned services.

Source of data: compulsory statistical survey with quarterly questionnaire „Business Services Output Prices”

Legal basis: Regulation (EC) No 1158/2005 of the European Parliament and of the Council.

First reference period: Q1/2007 (with the base year 2006)

Pricing methods for services: all specific information based on which the service producer unit price can be determined.

 

The Methodological guide for developing producer price indices for services (publication of OECD-Eurostat, ISSN 1725–0099) suggests using seven pricing methods:
1.Direct use of prices of repeated services: it is a pricing method which surveys real transaction prices or list prices (although this latter is not proposed). It can be applied when services or „service packages” are actually realized in every survey period.
2.Contract pricing: contract pricing uses real transaction prices. It is applied when the same producer sells the same (or very similar) service to the same client in several survey periods. Contract prices are agreed for the whole period when the contract is concluded or renewed, in the case of a framework agreement prices may change according to the conditions of the agreement in each survey period.
3.Component pricing: component pricing is a pricing method that divides the composite service into a number of key output components, which are priced separately based on real transaction prices, then component data are combined to form the service price.
4.Model pricing: model pricing is a method in which a price for a standardised product is estimated based on a model transaction which is not actually transacted in the comparison period.
5.Unit value method: a pricing method in which the unit price index is determined as the quotient of the value (sales revenue) and quantity of services sold over a large number of transactions. The method is applicable in cases when service types in a group of services are relatively homogeneous.
6.Percentage fee method: the percentage fee method is a method that estimates a price by multiplying the value of an asset tied to the service by a percentage.
7.Pricing based on working time: this pricing method surveys the amount of money charged to a buyer of a service, for a standard amount (e.g. one hour) of work carried out by an employee contributing to the production (provision) of that service (which amount of money should not be mistaken for the employee's wage).
Method for index calculation:
Composite „PRODUCT”-type price indices are the aggregates of enterprise-level product-type price indices of CPA'08 categories (previous quarter = 100%).
1.Price relatives (quotient of the reference and base period unit price).
2.Elementary price indices: 6-digit price indices for enterprises (weighted arithmetical or unweighted geometrical average of price relatives, product type).
3.4-digit, product-type price indices for enterprises (weighted arithmetical or unweighted geometrical average).
4.Sub-index for „large” enterprises (full coverage, weighted arithmetical average, product type).
5.Sub-index for „smaller” enterprises (representative sample survey, unweighted geometrical average, product type).
6.Compilation of class-level indices (4-digit level of CPA'08, weighted arithmetical average, proportionate to the sales revenue of „large” and „smaller” enterprises, product type).

The NACE Rev.2 4-digit level weights are SBS turnover data from 2 years prior to the actual year. The indices are chain linked with annually up-dated weights.

 

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Consumer price index, consumer prices

The consumer price index is calculated monthly and covers the whole country and all private households. It is the measure of the price changes of goods and services intended for household consumption.

Official base: the base period of the index calculation is December of the previous year. In addition, every month the indices are calculated on the basis of the previous month and the same month of the previous year. All other (quarterly, yearly, etc.) indices are calculated as composite chain indices of the above mentioned monthly indices.

Method of data collection: Selections of representative items (goods and services) as well as the outlets are based on information from various sources (retail trade, regional offices etc.) The purposive selection is concentrated on the volume selling items and outlets proportionate to size. In case of seasonal products "markets" are also selected for price observation.

At present there are approximately 1000 items to be observed monthly. Altogether more than eighty thousand prices are collected monthly.

All items to be observed are specified according to quality, trade mark, type etc. In certain cases the price collectors have some freedom to select different varieties in different outlets, but they have to leave them unchanged within a given outlet till the selected commodity satisfies the criteria of representatives and expected continuous availability. Replacements are controlled centrally when necessary. Prices (price indices) for seasonal items are imputed when needed. Certain items like consumption from own production, credit charges, direct taxes, second-hand transactions – except cars – are excluded.

The weights used for the compilation of the Consumer Price Index (CPI) represent the ratio of goods and services within the final monetary consumption of households. From 2012 the weights are based on the provisional macro data of National Accounts relating to the year t-2 while in previous years this data source was completed with the HBS data as well.

The CPI is a fixed base weighted index (Laspeyres type). The weights of the 140 basic headings are the same every month throughout the year.

The calculation of CPI: The price relatives of the representative items are calculated by dividing the average price of the given item of the current month by the average price of the base month. The price index of the 140 basic headings is the weighted mean of the price relatives of the included representative items. The price indices of the main groups and the total consumption are the weighted average of 140 basic headings.

From 2012, CPI does not include the cost of imputed rents which was formerly appeared within group of services. According to the regulation of National Accounts, this item is not considered as purchased consumption thus it is excluded from the CPI. Hence, there are 140 basic headings instead of the preceding 141.

Publication: The price indices of the groups of commodities are published monthly, quarterly and yearly on different bases. The price indices of different types of households using the weights of the family expenditure structure are also published.

During the calculation of the consumer price index, both average prices and indices are made with several decimal places. Subsequently, when the results are published, the data will be rounded based on:

The annual CPI, which indicates the annual average price change, is calculated as the arithmetic average of 12-month price changes rounded to two decimal places, where each month is given equal weight in the calculation. The resulting index is then rounded to one decimal point, and this data is included in the publications.

The harmonized consumer price indices (HICP) are not and will never be "fully" harmonised consumer price indices, in as much as the aim is comparability and not full harmonisation. The HICPs are not intended to replace national CPIs. All Member States are likely to continue their existing CPIs for domestic purposes.

The harmonized indices were based on existing national CPIs, but the HICPs are harmonized in several methodological areas as well as coverage.

However some difficult categories, including owner occupied dwellings are still not covered by the HICP.

The weights of HICP are based fully on the provisional macro data of National Accounts relating to the year t-2 while in previous years this data source was completed with the HBS data as well. The methodology of the weight calculation is fully in line with the recommendation of the implemented Commission Regulation (EU) No 1114/2010 which is in force from 1 January 2012. Due to the introduction of the methodological and technical improvements of National Accounts in September 2011 i.e. 'Integration of Supply and use tables (SUT) in the national accounts' the structure of the households' consumption has significantly changedThis restructuring has affected the HICP weight system as well in 2012.

The weights should include expenditure by foreign visitors besides the expenditure by all household which takes place on the economic territory of the given country (domestic concept).

The common index reference period has been the year 2015.

In Hungary, the HICP and the national CPI are almost the same taking the view that the two indices should be as similar as possible for the sake of efficiency. The only differences are that:

The core or underlying inflation is calculated in order to obtain the long term "core" component of the inflation by eliminating the one-shot shocks in price development from the consumer price index (CPI).

The HCSO calculates this indicator from the CPI according to the changes in January 2009 by eliminating the following items:

In the course of revising the content of the index, the scope of omitted items expanded in January 2012, mainly in case of services.

From January 2012, the costs of imputed rents are excluded from the core inflation as it was excluded from the CPI also. The core inflation indicator covers 69% of the CPI's items by their weight. After the elimination the remaining items are proportionally re-weighted in order to obtain 100% as the sum of their weights. The core inflation indicator is seasonally adjusted corresponding to the international practice.

The core inflation indicator is calculated on December 1994 base.

The TRAMO/SEATS software is used by the HCSO for seasonal adjustment. TRAMO/SEATS is a stochastic, completely model-based approach to decomposition, usually referred to as ARIMA-based signal extraction method. More»

In consequence of the feature of seasonal adjustment all earlier published seasonally adjusted data can alter monthly retrospectively in each new publication. But the revision of the adjustment model takes place only once a year.

In January 2012, due to the changes in the content of the index we recalculated the time series backward until January 1995. Therefore, the time series of unadjusted core inflation also changed occasionally.

The constant tax rate index (CTI) eliminates from the CPI the impact of changes of the most important indirect taxes (VAT, excise duties, registration taxes for new motor cars). The CTI shows that how much the CPI would be if the reference period (December of the previous year) tax rates were in force in the current observation period. The aim of the CTI's calculation is the separation of the impact of indirect tax changes within the CPI. CTI is calculated on the base of December of the previous year similarly to the CPI and the same weights are applied for the aggregation of the CTI's sub-indices.

Source of methodology: Methodology of the Consumer Price Index (2000, HCSO, Budapest)

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