Indices of producer prices for services
What does the indicator describe?
The indices of producer prices for services measure, on a representative basis, the development of prices of business services provided for commercial customers in specific branches. The reference value of the indices is the turnover of the relevant service branches in the base year. These price statistics thus cover both the services provided for domestic and foreign customers of other stages in the economic process and the sales between industrial enterprises.
As producer price indices measure price changes at an early stage of the economic process, they are considered as indicators of future inflation trends. Also, they are often used in business contracts for the adjustment of recurring payments (stable-value clauses). In addition, producer price indices are used to deflate other values of economic statistics, e.g. in national accounting.
The compilation of producer price indices for specific business services is governed by a Regulation of the European Union (1158/2005). How is the indicator calculated?
The producer price indices are calculated on a quarterly basis. The reference days are generally the 15th day of the months of February, May, August and November. What is collected from a differing number of enterprises (between 50 and 500, depending on the branch) is prices of representatively selected services. The price collection, processing and index calculation are performed centrally by the Federal Statistical Office. The prices are net prices excluding VAT but, where applicable, including excise duties (e.g. mineral oil tax incl. ecological tax, tobacco tax) and other statutory charges (e.g. truck toll).
The producer price indices are calculated according to the Laspeyres formula, which is generally applied in German price statistics. What is characteristic of that type of index is that it records the price development over time while excluding quantity changes. This is done by defining a weighting pattern that is derived from the turnover shares of the selected services in the base year. The weights of the current base year 2006 will remain unchanged until the index has been converted to a new base year. Regarding the major calculations, the index can be referred to as the weighted average of the elementary indices of a selection of services that is representative of the sector concerned for a base year = 100.
Producer price indices are intended to measure only pure price changes, as are the other price indices of official statistics. This is achieved by keeping constant all factors that are relevant for the price level (among other things, quantity, quality, terms of delivery and payment). If one of those variables changes, the difference between the new price and the price reported previously may include a non-genuine price change, which is eliminated by applying various quality adjustment methods. When is the indicator released?
The quarterly results are published not later than 90 days after the end of the reference quarter in a press release and in tables. The press releases and data tables on the indices as well as more detailed descriptions on the various branches are available on the website of the Federal Statistical Office.
The producer prices of services are calculated for a variety of important service branches, for some of which data in a more detailed breakdown are also available. Also, the range of price indices is continuously being extended to include other economic branches. For some branches, sector-specific information is available. How accurate is the indicator?
The producer price indices are calculated as index numbers with one decimal place. The figures are final for the relevant reference period. When changing over to a more recent base year, slight revision differences will occur as new calculation bases are used (basket of goods, weighting pattern, sample of reporting units).
Further Information
Producer price statistics information service
Phone: +49 611 75 2444 or 3441
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