Workshop on Price Index Compilation Issues

February 23-27, 2015

Classification Systems

Gefinor Rotana Hotel, Beirut, Lebanon

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Classification: Why Classify?Classification systems determine empirical economic analysis. Classification must therefore be:

By meaningful criteriaNeither too aggregated nor too fine at the published levelAcceptable and comparable across countriesComparable across a sequence of accountsExhaustive and mutually exclusiveFlexible: new codes / satellite accountsUseful in determining sampling units and stratification factors

February 23-27, 2015 METAC and IMF Statistics Dept.

International and regional classification standards

Classification of Statistical unitsFunctional expenditure classificationsProduct classifications

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Classification of Statistical units

Institutional units Establishments of enterprise institutional units

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International and regional classification standards

Activity or industryInternational• International Standard Industrial

Classification of all Economic Activities (ISIC, Rev 2, 3,4)

Regional variants• NACE (EUROSTAT)• North American Industrial Classification

System (NAICS)• Australia-New Zealand Standard Industrial

Classification (ANZSIC)

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Establishments

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MAJOR CHAPTERS OF THE ISIC REV. 4 The principal economic activities of the International Standard Industrial Classification of All Economic Activities (ISIC), revision 4, are A Agriculture, forestry and fishing B Mining and quarrying C Manufacturing D Electricity, gas, steam and air conditioning supply E Water supply F Construction G Wholesale and retail trade; repair of motor vehicles and motorcycles H Transport and storage I Accommodation and food services J Information and communication K Financial and insurance activities L Real estate activities M Professional, scientific and technical activities N Administration and support activities O Public administration and defence; compulsory social security P Education Q Human health and social work activities R Arts, entertainment and recreation S Other service activities T Activities of households U Activities of extraterritorial organizations and bodies

Functional Expenditure classifications

Classifications Of Individual Consumption by Purpose (COICOP)

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Product classifications International systems

Harmonized Commodity Description and Coding System (HS) Standard Industrial Trade Classification (SITC) Central Product Classification (CPC)

Regional variantsClassification of Products by Activity (CPA) [EUROSTAT]Australia-New Zealand Central Product Classification (CPC derivative)Pending North American systemOften extensions of industry or activity classifications for PPI, of expenditure classifications for CPIFebruary 23-27, 2015 METAC and IMF Statistics Dept.

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Using classifications in price statistics

Expenditure ClassificationsCPIPPI

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Using classifications in price statistics

CPIHousehold expenditure surveys use classifications for budget items that are distinct from standard product classificationInternational: COICOP for HES, CPC for price survey, but a correspondence table exists to map CPC into COICOP

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COICOP: DIVISIONS

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INDIVIDUAL CONSUMPTION EXPENDITURE OF: - HOUSEHOLDS

01. Food and non-alcoholic beverages 02. Alcoholic beverages, tobacco and narcotics 03. Clothing and footwear 04. Housing, water, electricity, gas and other fuels 05. Furnishings, household equipment and routine maintenance of the house 06. Health 07. Transport 08. Communication 09. Recreation and culture 10. Education 11. Restaurants and hotels 12. Miscellaneous goods and services

- NON-PROFIT INSTITUTIONS SERVING HOUSEHOLDS

13. Individual consumption expenditure of non-profit institutions serving households

- GENERAL GOVERNMENT 14. Individual consumption expenditure of general government

Using classifications in price statisticsPPI and construction put in place price index

Classification of establishments in business censuses and surveys, including the PPI price survey. Such censuses and surveys would include both government and privately owned establishments engaged in the covered activities. Production and capital formation surveys should use the same product classification to facilitate supply and use analysis.Issue: National business surveys generally use product classifications that are extensions of the industry classification, but as noted in the previous topic, this classification is not used in coding consumer price surveys, which are an extension of the household expenditure classification.

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