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Reflection consumers’ e-commerce change on the CPI

This article explores the reflection of consumers' e-commerce changes on the Korean Consumer Price Index (CPI), including an outline of the Korean CPI, internet development in Korea, e-commerce in the Korean CPI, and its conclusion.

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Reflection consumers’ e-commerce change on the CPI

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  1. UNECE/ILO Meeting on Consumer Price Index Reflection consumers’ e-commerce change on the CPI Kyunghee Kim, Statistics Korea (KOSTAT)

  2. Contents • Korean CPI outline • Internet development in Korea • E-commerce in Korean CPI • Conclusion

  3. I. Korean CPI outline • Usage • Inflation measurement • Expenditure deflation at current prices or income • Indexation of social security benefit • Pension, compensation, reparation

  4. I. Korean CPI outline • Scope • Households • Exclude households whose primary activity is farming or fishing • Geographical area • 7 metropolitan area and 31 large cities • Outlets • The PDS collects prices of an item in 150 local stores.

  5. I. Korean CPI outline • Items and Weight • Items and weights are derived from the Household Income and Expenditure Survey (the HIES) conducted in 9000 households • Revision in every 5 years ending 0 or 5 • Items, weight, and cities are changed • The PSD prepares 2010 revision

  6. I. Korean CPI outline • Price Collection • Conduct regularly every month • Agricultural product, gasoline, golden ring • Three times a month • Manufactured goods and services • Once a month

  7. II. Internet development in Korea • 8 out of 10 households access the Internet • 6 out of 10 persons experience the Internet shopping

  8. III. E-commerce in Korean CPI • For 19 items, the PSD has collected prices through the Internet shopping malls and produces the CPI since 2005. • The PSD prepares the revision of 2010 rebase • Three criteria for e-commerce’s items • Transaction percent • Survey availability • Different price trend

  9. III. E-commerce in Korean CPI • Transaction values • E-commerce and cyber shopping survey • Ad hoc survey in the HIES households • Items : Households appliances, Cosmetic, Books, Computers and other appliances

  10. III. Transaction Value by commodity (Unit : billion won)

  11. III. E-commerce in Korean CPI • Survey Availability • Items and Internet shopping malls • Each product has its own popular shopping malls • Pretest for 6 months and check survey availability

  12. III. E-commerce in Korean CPI • Different price trend • T-test of the means and variance between the prices of the Internet shopping malls and local stores • Exclusion items which have the same trend

  13. III. E-commerce in Korean CPI • Weight • Households Income and Expenditure Survey could not provide information the goods are purchased by the on-line or off-line • The PSD computes the weights of items for e-commerce by Wholesale and retail trade survey and E-commerce and cyber shopping survey

  14. (Unit : billion won) A : Wholesale and retail trade survey B : E-commerce and cyber shopping survey

  15. III. E-commerce in Korean CPI • Index • The PSD weights the two relative prices to produce the item index • Internet shopping malls & local stores • Refrigerator index • Internet shopping : 120.5 • Local stores : 130.4 • 130.4 =120.5*0.135 + 130.4*0.875

  16. IV. Conclusion • Finalize the items and weights for e-commerce in December 2010 • E-commerce’s impact on the CPI will be increased in 2010 rebase because of more items and weights

  17. Thank you for your attention & Welcome any question

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