Consumer goods and services - OECD

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Eurostat-OECD Methodological Manual on Purchasing Power Parities

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Consumer goods and services

Please cite this chapter as: OECD/Eurostat (2012), "Consumer goods and services", in EurostatOECD Methodological Manual on Purchasing Power Parities, OECD Publishing.

This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

12 Calculation and aggregation of PPPs

Chapter 5: Consumer goods and services Consumer goods and services

5 Consumer goods and services

5.1 Introduction

5.1 Individual consumption expenditure by households covers the actual and imputed final consumption expenditure incurred by households on the goods and services they require to satisfy their individual needs and wants. It accounts on average for over 60 per cent of GDP and over 85 per cent of actual individual consumption in EU Member States and OECD Member Countries. It is by far the most important of the seven main aggregates that constitute the Eurostat-OECD classification of GDP expenditures and, as such, it is central to the international price and volume comparisons organised by Eurostat and the OECD.

5.2 Households purchase a large and diverse assortment of individual goods and services, but only a subset of these are priced for the purpose of calculating purchasing power parities (PPPs). This chapter explains how the subset of consumer goods and services is selected and how the selected goods and services are specified for Eurostat and OECD comparisons. It also explains how prices for the specified products should be collected, how the prices collected are validated and how the validated prices are converted into national and annual purchasers' prices. The chapter begins with an overview of the survey process and then describes in detail each of its various stages.

5.3 The consumer services covered in this chapter do not include housing, in-patient hospital services and education. These services are covered respectively in Chapters 6, 7 and 8.

5.2 Survey process

5.4 An important feature of Eurostat and OECD comparisons is that prices for consumer goods and services are collected over a period of three years (see Chapter 3, Section 3.3). The basket of products comprising household final consumption expenditure is divided into six parts with prices for two parts being surveyed each year. This requires the organisation of six separate price surveys. The six surveys of the current cycle are listed in Box 5.1 together with a summary of the types of products each survey covers. The advantages of this rolling survey approach is that it lessens the response burden on participating countries and allows national statistical institutes (NSIs) to include the price surveys in their regular programme of data collection.

5.5 A second important feature of Eurostat and OECD comparisons is that there are too many participating countries for the six price surveys to be managed centrally by either Eurostat or the OECD. Organisation is therefore decentralised for operational reasons. Participating countries are divided into groups, each headed by a group leader. Members and leaders of the current country groups are listed in Chapter 3 Box 3.3. The responsibilities of the group leader include coordinating the establishment of a group product list for each survey and overseeing the validation of the prices collected by the group during each survey. Neither task can be accomplished without the active involvement of the group members. Eurostat and OECD oversee the co-ordination between group leaders and ensure a harmonised approach to the surveys between groups.

5.6 A generalised timetable of the survey cycle is outlined in Box 5.2. Two price surveys are conducted each year. For example, in year 2, prices are collected for survey 1 and survey 2, but preparations for the two surveys start in year 1 and the processing of the two surveys ends in year 3. Each survey takes around 24 months to complete and each has five phases: the preview and planning phase, the pre-survey and item list creation phase; the price collection and intra-country validation phase; the validation phase; and the evaluation phase. Within any calendar year, work is underway on all six surveys: the two surveys of the previous year are being finalised; the two surveys of the current year are being carried out; and the two surveys of the following year are being prepared.

Eurostat-OECD Methodological Manual on Purchasing Power Parities

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