• Producer Price Index posts negative annual rate

Producer Price Index (PPI, 2000=100) for manufacturing posted a decrement of 4.2 percent in November 2013 from negative 5.7 percent in October 2013, compared with the year ago level, according to the preliminary results of the Monthly Producer Price Survey. Furniture and fixtures, with a double-digit decrease of 35.4 percent mainly influenced the negative rate of the PPI.  On the other hand, miscellaneous manufactures with an increase of 13.9 percent led the ten sectors that reflected increments. Refer to Tables 1 and A-1.

On a month-on-month basis, PPI rose to 0.7 percent in November 2013 from 0.3 percent in October 2013. Increases in prices of the three heavily weighted sectors pulled up the monthly PPI. These were: petroleum products (4.7%), electrical machinery (2.3%) and machinery except electrical (1.2%). On the other hand, five sectors posted flat growths while six sectors posted deceases. Refer to Tables 1 and A-2

Technical Notes

• Introduction

The National Statistics Office generates various price indices, one of these is the Producer Price Index (PPI). The PPI, a designated statistics, is generated through the results of the Producer Price Survey (PPS) conducted nationwide. The survey gathers monthly producer prices of selected products of establishments included in the market basket.

The PPI is used as a deflator of the Monthly Integrated Survey of Selected Industries (MISSI) to derive indicators for the Volume of Production Index (VoPI) and Volume of Net Sales (VoNSI).

• Method of Index Computation

PPI utilizes the Paasche-type method of index computation. The weights are computed from the value of production to derive concentration ratios from the Census of Philippine Business and Industry (CPBI) or Annual Survey of Philippine Business and Industry (ASPBI). The weights are updated as soon as new results of the ASPBI or CPBI are available and applied at the beginning of each survey year.

For the 2013 PPI, the weights of the major sectors and sub-sectors were computed from the results of the 2010 ASPBI for Manufacturing Establishments with total employment of 20 and over, which is the latest survey results.

The formulas in the computation of the PPI are as follows:

• Industry Coverage

Starting with January 2013 reference month, the PPI utilizes the 2009 Philippine Standard Industry Classification (PSIC) to classify sectors and industries. Twenty industry classes of the 2009 PSIC were grouped to form the industry coverage of the 2013 PPS. These are presented in the table below.

Note:  * - Major sectors categorized  into sub-sectors

• Response Rate

The response rate for November 2013 is 84.9 percent, which corresponds to the retrieval of 298 establishments’ reports out of the 351 samples for the survey.  Refer to Table B.

Missing prices for products of sample establishments are estimated using the short-term relative change of all available prices within the same industry class. Revisions to the preliminary estimates are done upon receipt of actual reports from late respondents.

(Sgd) CARMELITA N. ERICTA

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