The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday said that it would release its producer price index (PPI) on a monthly basis starting next year to better capture movements in selling prices from domestic production and to stay with the global trend.
The agency said that it has finished compiling its latest PPI data and plans to present them to the quarterly review committee next month to update the nation’s GDP growth and per capita income.
DGBAS has relied on the wholesale price index (WPI) to track the cost of production for the past 40 years, while most economies worldwide favor PPI, widely considered an objective tool for adjusting prices in long-term purchasing agreements, it said.
Photo: CNA
Because prices fluctuate, long-term deals are difficult with only a single, fixed price for goods or supplies, so the purchasing business and the supplier typically include a clause in the contract that adjusts the cost by external indicators, such as PPI, it said.
It is time for the DGBAS to adjust and link up with the world after decades of guiding its inflation observations using the consumer price index and cost of production with WPI, DGBAS officials told Chinese-language media.
WPI reflects purchase costs and factory-gate prices, making its boundary less clear-cut in measuring production costs and GDP, the officials said.
PPI would limit its survey to domestic producers — exporters and importers — and omit trading companies and re-exporters, as trading firms are not manufacturers and re-exporters make a profit by processing foreign goods, they said.
DGBAS has long sought to compile PPI and replace WPI, but hesitated due to concerns over rules governing asset revaluations of profit-making organizations and WPI links to basic labor wages, the agency said.
As a result, WPI would continue with PPI, unless people mix them up, it said.
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