PRICE COLLECTION IN UNSTABLE MARKET CONDITIONS

1. PRICE COLLECTIONIN UNSTABLE MARKET CONDITIONS Miroslav Jankovic (Statistical Office of Serbia and Montenegro) Dragi Stojiljkovic Tatjana Stanojevic-Miladinovic (Statistical Office of the Republic of Serbia) Joint UNECE/ILO Meeting on Consumer Price Indices Geneva, 10-12 May 2006

2. INTRODUCTION • National level: Serbia and Montenegro (Statistical Office of Serbia and Montenegro) • Republican level: Serbia (Statistical Office of the Republic of Serbia) Montenegro (Statistical Office of the Republic of Montenegro – MONSTAT) • Lower levels: Central Serbia, Vojvodina, Belgrade

3. INTRODUCTION Retail price indices in Serbia and Montenegro: • 1954 (data produced and published) • 1962 (methodology published) • Methods are the same for all levels • In accordance with international standards

4. INTRODUCTION The case of retail price indices in the Republic of Serbia: • Chronology of market conditions (1990-2005) • Price collection • Calculation • Further development

5. UNSTABLE MARKET CONDITIONS • In the period 1990 – 2005 market conditions in Serbia were frequently changed • The price statisticians had to react in the quickest possible way

6. UNSTABLE MARKET CONDITIONS April 1991 to January 1994 – Hyperinflation: • Printing paper currency (in December 1993 the highest nominal value of banknote was 500.000.000.000 Dinars) • Dinar devaluations (exchange rate was 1.028.727.207.263 Dinars for 1 DEM as of December 31, 1993) • Dinar denominations (January 1, 1994 1.000.000.000 Dinars = 1 Dinar)

7. UNSTABLE MARKET CONDITIONS Hyperinflation – official statistical results: • In January 1994 prices changed at the rate of 60% daily • Monthly retail price index in January 1994 (previous month = 100) was 302.760.900 • Retail price index in December 1993 (December 1992 = 100) was 346.977.256.912.227

8. UNSTABLE MARKET CONDITIONS End of Hyperinflation: • Hyperinflation caused complete market breakdown • At January 24, 1994 New dinar was introduced • 13.000.000 Dinars = 1 New dinar • 1 New dinar for 1 DEM

9. UNSTABLE MARKET CONDITIONS 1995 to 2000: • Breakdown of the huge trade systems • Large number of small shops (with limited and changeable goods assortment) appeared • Significant share of turnover was relocated into underground and illegal economy • Bigger sample needed to ensure reliable price indices

10. UNSTABLE MARKET CONDITIONS 2001 to 2005: • Foreign investments and privatization • The chains of big supermarkets were established in main towns • Small shops almost completely diminished • Problem of missing prices and quality harmonization

11. BASIC ELEMENTS National retail price indices: • Retail price index - used as national inflation measure and deflator of output and assets value • Consumer price index (Cost of living index) - used for salaries (wages), pensions and other social benefits revaluation

12. BASIC ELEMENTS • Coverage: Prices collected in 15 towns in Serbia • List of products: about 500 products (definitions detailed enough and general enough) • Classifications: national classifications of goods and services by origin and purpose (different from COICOP)

13. BASIC ELEMENTS Weights: • Structure of retail turnover of goods and services (for retail price index) • Structure of household consumption (for consumer price index)

14. PRICE COLLECTION Main principles: • Products being bought most often and price dynamics is representative for the whole group of products • Shops that reflect consumers’ habits • Price collectors are full-time employees in regional offices

15. PRICE COLLECTION • Selection of shops – recording places (with the highest turnover, where prices represent the average of prices in town) • Selection of products (most sold, present for a longer period of time) • Substitution of shops and products (closing of a shop, deficit of a product)

16. PRICE COLLECTION Time/period of prices recording: • Manufactured non-food goods (from 3rd to 10th each month) • Manufactured food goods (from 11th to 12th) • Services (from 16th to 18th) • Agricultural goods (in the first and the third week of each month)

17. PRICE COLLECTION • Documentation of prices recording • Prices recording procedures (auxiliary papers, data base, sending to Price department) • Validation and control of recorded prices

18. DATA PROCESSING Average prices: • Average monthly prices (for a town, territory, the Republic of Serbia) • Average annual prices (simple arithmetic mean of average monthly prices except for seasonal agricultural goods)

19. DATA PROCESSING Indices calculation: • Individual indices (for products) • Aggregated indices (for groups and total) • Annual indices

20. DISSEMINATION Following indices are published: • Current month in relation to: average of previous year, previous month, same month of the previous year and December of the previous year • Period from the beginning of the year in relation to: average of previous year and same period of the previous year

21. OTHER METHODOLOGICAL ISSUES • Treatment of seasonal products • Adjusting of price changes to quality changes: - minor change of a product - significant change - when price change is not harmonized with quality change

22. FURTHER DEVELOPMENT • Analysis and updating of the product list • Introducing COICOP classification • Computing seasonal products prices • Analysis of various formula effects • Excluding the influence of quality change on price change • Introducing hand held computers in data collecting

23. CONCLUSION • Quality of retail price indices is the priority task of official statistics • Data collection improved by creating new instruction for price recording and intensifying the training of price collectors • General intention to produce and publish new CPI in accordance with EU standards and COICOP classification starting from January 2007

24. PRICE COLLECTIONIN UNSTABLE MARKET CONDITIONS Miroslav Jankovic (Statistical Office of Serbia and Montenegro) Dragi Stojiljkovic Tatjana Stanojevic-Miladinovic (Statistical Office of the Republic of Serbia) Joint UNECE/ILO Meeting on Consumer Price Indices Geneva, 10-12 May 2006