ICP National Coordinators Meeting Beirut, 1-3 September 2004

1. ICP National Coordinators MeetingBeirut, 1-3 September 2004 ICP SURVEY PROCEDURES Michael Ward

2. Sampling and Price Collection • The possibilities and limitations of obtaining closer harmony between the CPI and ICP pricing processes were explored in previous ESCWA presentations: • CPI and ICP Prices, • Sampling and Selection of Products and Prices in the ICP, and • ICP Price Concepts and PPPs (M. Ward, June 2003 and November 2003)

3. Reasons for establishing new ICP final expenditure prices on CPI based pricing exercise:

4. CPI prices are representative of domestic consumption patterns; • CPI outlets selected are representative of spending behaviour; • CPI methodology and data coverage provides the basis for determining the expected value of national average prices; • CPI elementary price level measurement and aggregation procedures establish guidelines and support for calculating annual average prices; • CPI procedures reduce the cost of conducting an ICP survey.

5. But: • CPI based on: • a sample • notion of average • not necessarily most popular expenditure outlets. • ICP based on: • estimating comprehensive national aggregates • outlays from all classes and all shades of spending (cash, kind or imputed). • CPI scope related expenditures is restrictive in the national accounts. • Grossed up hh expenditure survey estimates used in CPI are not the same as the consumption aggregates in the national accounts.

6. The ‘consumption’ concepts of acquisition used in CPI is not the same as ICP concept of “use” and “actual outlays” and don’t have universal application. • CPI concentrates on representativity. • ICP must match “representativeness” with “comparability” criteria. • CPI prices may refer dominantly to “offer” and “available on sale” prices which may not be the true transaction price. • The ICP should obtain the best-unbiased estimates of the average unit values embedded in national expenditures.

7. Outcome of Recent ESCWA Member Country Review • Use as much existing information • Use subjective and judgmental evaluations/observation/experience of field enumerators

8. basis to select sales outlets + provide representative price data A “bundle” of prices that will: • generate a good unbiased estimate of the national price (average unit value); • be inherent in the value of various national expenditure outlays.

9. But, it also raises the question whether the “average” price appropriately reflects overall annual and national price phenomena, as well as the prices paid by various socio-economic classes resident in the community.

10. Sampling Approach; Outlets and Products • No magic formula or sampling “silver bullet” exists. • Each country is different, socially, culturally, economically and topographically. • Multi-stage area sampling, quasi-random pre-stratified sampling or systematic survey?. • Household surveys and national accounts enquiries do not collect information on the outlets where households make purchases. • Survey staff know where and how much shopping is done at these points.

11. Outlet and Product Choice • Where and how people shop or obtain services depends on: • where people live • how rich they are • how mobile they are; and • Role of social factors in influencing where people decide to shop.

12. The prices they pay depend on: • outlet nature • outlet size • outlet ownership • outlet turnover; • power and determination to negotiate, • where people live • willingness and ability of customers to “ shop around” and bargain. • presence of special sales taxes, discounts, outlet sales, lost leader lines, etc. • The effect of these variables on prices are not necessarily important to the CPI but are taken into account in the ICP.

13. ESCWA has developed a survey “reference frame” to: • guide National Coordinators • ensure problems are treated consistently across the region • reflect characteristicity and representativity.

14. Thank you.