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December 1998, Vol. 121, No. 12
Comparing PPI energy indexes to alternative data sourcesKatherine A. Klemmer and Joseph L. Kelley
The Bureau of Labor Statistics produces a family of indexes, called Producer Price Indexes, that measure the average change in prices received by domestic producers for their output. These indexes, updated monthly, are published at numerous levels of product aggregation and in a variety of classification schemes. Periodically, BLS reviews its indexes by comparing them with alternative measures of price trends. This article presents the results of one such test, which focuses on the important and price-volatile group of energy commodities, as arrayed within a stage-of-processing system of price indexes.
The stage-of-processing (SOP) system is one of the primary classification schemes used by BLS to develop Producer Price Indexes (PPIs). The SOP indexes are commodity-based measures that regroup commodities at the subproduct class,1 according to the class of buyer and the amount of physical processing or assembling the products have undergone. There are three major, or aggregate, SOP categories of goods: finished, intermediate, and crude. Finished goods are defined as commodities that are ready for sale to the final user, which could be either an individual or a business firm. Examples include bread, gasoline, apparel, and passenger cars. Intermediate goods are materials, supplies, and components that have been partially processed but require further processing. Intermediate goods also consist of nondurable, physically complete goods purchased by business firms as inputs to their operations. Intermediate goods include flour, cotton yarn, steel mill products, and lumber. Crude materials are defined as unprocessed commodities entering the market for the first time, such as crude petroleum, natural gas to pipelines, gravel, sand, steel scrap, and coal.2
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1 The subproduct class level is the six-digit level of the Producer Price Index Classification system unique to the PPI program. A complete listing of the commodity structure is available on the Internet at: ftp://ftp.bls.gov/pub/time.series/wp/wp.item
2 For further information on these indexes see BLS Handbook of Methods, Bulletin 2490 (Bureau of Labor Statistics, 1997), ch. 14.
Improving the PPI sample for prescription pharmaceuticals.Oct. 1997.
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