Index of producer prices for industrial products (domestic sales)
What is the index of producer prices for industrial products?
The index of producer prices for industrial products (domestic sales) measures the average price development for raw materials and industrial products produced in Germany and sold within the country. The producers of such goods belong to the branches of manufacturing, energy and water industry and mining. Indices of producer prices are calculated not only for industrial products but also for agriculture, forestry (state forests), construction and specific services. Producer price indices are used to deflate various aggregates of economic statistics as part of national accounts. Also, they are often used in contracts to adjust recurring payments to the price development (stable-value clauses). In addition, producer price indices provide information on future inflation trends as they measure price changes at an early economic stage of the value-added chain.
How is the producer price index for industrial products calculated?
To calculate the producer price index for industrial products, first of all the types of products are defined which are to be covered by the survey. The starting point is the product types of the Product Classification for Production Statistics (GP 2009), which are produced by the enterprises of the sectors of manufacturing, energy and water industry and mining. From those economic sectors, 226 classes of economic activity are selected in which the producer prices of industrial products are collected. In each class of economic activity, those types of products are selected for price collection that have the largest importance in terms of turnover for German producers. At least 60% of the turnover of any class of economic activity is to be represented.
For those currently 1,272 types of products, the Federal Statistical Office generally chooses the enterprises with the highest output to use them as reporting enterprises. From the range of given product types, the reporting enterprises select a representative product with a high and stable importance in terms of turnover for the "basket of goods" of the producer price index for industrial products. So that basket of goods contains all products actually included in price monitoring, including their precisely defined terms of contract. It is continuously checked and updated when necessary.
To measure the price development, the approximately 5,000 reporting enterprises report the prices of the products of the basket of goods to the Federal Statistical Office every month on the 15th day of the reference month. The enterprises report prices contractually agreed upon with their customers, excluding VAT but including excise duties and other statutory charges. A total of some 9.000 individual prices are collected in this way every month. A specific product selected for price monitoring will be exchanged by the enterprise for another product if it is no longer (or rarely) sold. To allow a genuine price comparison, products of the same quality and the same quantity are compared with each other for the calculation of the producer price index. If the quality or quantity of a product sold by a reporting enterprise changes, quality adjustment is performed. For example, an improvement in quality with the price remaining constant, which occurs in the context of technical progress, is recorded as a price decrease in price index calculation.
To calculate the producer price index for all industrial products, the Federal Statistical Office weights the average price development of a product type according to its importance in terms of turnover. The result is a weighted average of the development of producer prices of industrial products in Germany. The weighting information is contained in the weighting pattern. Contrary to the basket of goods, the weighting pattern for the producer price index is updated only every five years when the index is put on a new base year. This allows showing the genuine price development within the five-year period, that is, without influence by changes in turnover weights.
The main basis for calculating the weighting pattern, regarding the selection of both product types and reporting enterprises, is the turnover and production statistics of the Federal Statistical Office. Other external data sources such as excise duty statistics are also used.
When and where is the producer price index for industrial products released?
The monthly results of the producer price index for industrial products are published in a press release around the 20th day of the month following the reference month. Aggregate table results may be downloaded through the publication service. Detailed results of producer price statistics are available in our GENESIS-Online database and the detailed release calendar is available on the Destatis website.
