paul j crowley head of prices international relations central statistics office ireland
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Paul J Crowley Head of Prices & International Relations Central Statistics Office Ireland. Purpose of Presentation. To examine the need for an EU wide study of price comparisons If there is such a need – can it be met? Show how a more limited approach worked in the case of Ireland

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Presentation Transcript
purpose of presentation
Purpose of Presentation
  • To examine the need for an EU wide study of price comparisons
  • If there is such a need – can it be met?
  • Show how a more limited approach worked in the case of Ireland
  • Illustrate what other information is available to consumers
  • Discuss the proposed methods to derive detailed prices
  • Consider the better use of existing data
detailed prices
Detailed Prices

2 Drivers

  • Average price data required for product & market monitoring
  • Publication would serve to improve HICP Communications –> proof official inflation covers products/services people buy

However arguments to support these propositions ->weak

product market monitoring
Product & Market Monitoring

Assumption efficiency of single market -> price

convergence

However markets are different

-> different levels of income

-> different levels of direct & indirect taxation

-> different standards of living

-> different consumer tastes & patterns

-> not homogeneous – types/sizes/brands/quality

product market monitoring1
Product & Market Monitoring

Direct comparison – items must be comparable with

respect to size, quality, popularity and available in each

MS -> examples – Coca Cola, Big Mac, Petrol, Cinema

Problems – Clothing – style, quality, brand, outlet

Example – cup of coffee (include service charge, table

service, 1 cup) €2.26 Austria €0.37 Bulgaria – description

is too loose – multiple types

1 st of experimental results hicp
1st of Experimental Results - HICP

->Data gaps – countries missing

->Issues of comparability

->Range of prices (lowest & highest)

->Unit conversion (KG) – unit but not an average price

-> ignores - outlets/tight vs. loose specifications

  • Quality –> data fails to meet the strict requirements
  • Presents more questions than answers
  • Question the validity of results -> ‘meaningless’ & ‘questionable’
quality comparability
Quality & Comparability

‘Comparability is important up to a certain degree….products can be considered sufficiently comparable if they are perceived by consumers as equivalent and substitutable’ -Eurostat

Fundamentally disagree with this statement

Objective is to compare prices -> prerequisite -measure or compare the same items -> impact on quality/accuracy & reliability

case study ireland
Case Study - Ireland

Ireland - island nation separated from rest of Europe

But border frontier with Northern Ireland (UK) – cross

border trade

UK (including NI) main reference wrt price levels – media

European prices – holidays (alcohol, eating out)

ireland retail
Ireland -Retail

Up to 2008 - rapid economic growth, growth - employment,

incomes, standard of living, influx of UK multiples

Media reporting of price comparisons between Ireland

‘south of border’ and NI ‘north of border’ – specifically

Tesco which operated north & south – price variation

  • People ‘voted with their feet’ and travelled North
  • Impact – price war, UK sourcing, advertising, cheaper prices
retail other examples
Retail – Other examples
  • UK Multiples £sterling vs. € price £50 - €75 (€55)
  • North South Price Comparisons – Dental/Car Mainten
  • Prescribed Drugs – Spain – National Radio
  • Eating out/Alcohol – holidays – price comparisons
other sources of information
Other sources of information
  • Media – price comparisons – ‘Rip Off culture’
  • National Consumer Agency – price surveys of supermarkets
  • Revenue Commissioners – north/south survey of alcohol/tobacco/motor fuel – excise duties
  • Private websites – www.valueireland.ie - 78 different sites
  • UBS Prices & Earnings Survey – time per hr
  • Comreg – regulator – www.callcosts.ie
  • AA – petrol & diesel prices – eu comparisons
role of the hicp
Role of the HICP

Measure the evolution of prices & not to produce absolute

measure of average prices

  • Experts (HICP WP) – fundamental issues with use of HICP as the mechanism to create detailed prices
  • Lack of comparability makes it impossible to produce robust, reliable and quality comparisons
  • National Baskets - national competence/national consumer tastes & patterns – not comparable across the entire EU – for neighbouring countries

-> virtually impossible to make direct comparison across EU except where product/service is identical e.g. can of Coca Cola

alternative sources
Alternative Sources

PPPs - more suitable

- significant activity – comparability & represenativity

- MS price same or similar ‘representative’ item

- results – validation across EU

-> But recognise there are difficulties - 3 year cycle/Capitals

Integration of PPPs and HICP – difficulties & issues

Alternative sources including private sector – resources &

cost benefit

detailed prices are they required
Detailed Prices – Are they required?

Currently quality data does not exist

Is there a perceived or actual need? – who determines this?

DG SANCO identifies the need for hundreds of products -

this will never be met

Danger in ‘contaminating’ HICP by modifying, changing,

adding product descriptions – must be reflective of national patterns

detailed prices are they required 2
Detailed Prices – Are they required? 2

Consumers - ‘passing reference/interest’ but unlikely to

travel to Bulgaria to avail of Coffee which is a fraction of the

Irish price

-> more important is value and price comparisons within

the national territory – which supermarket is better value,

better choice and has special offers – advertising/own

experience

Discerning consumer–awareness/shop around –better value

conclusion
Conclusion

Q How much can be achieved by making better use of existing data?

  • Better use & explanation of PPPs (PLIs) – overall comparison of price levels
  • Increase understanding of HICP/CPI and maximise use of existing data
  • Supplement with range of alternative sources (media/www/regulators)

Q Integration of HICP/PPPs

- No significant value in integration

Q When and where can current data collected be supplemented by other sources?

- By who , costs & benefits

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