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Outline of Input-Output Price Index of the Manufacturing Industry by Sector (IOPI, 2000 base)

December 2007
Bank of Japan
Research and Statistics Department

1. Purpose and uses

The IOPI focuses on the prices of products in the manufacturing industry. The IOPI consists of the Input Price Index and the Output Price Index, which covers prices of goods used for production and those made by production, respectively. The IOPI also includes the Output/Input Price Ratio Index, which is calculated by dividing the Output Price Index by the Input Price Index. The main purposes of the index are: 1) facilitating comparative analyses of price fluctuations in inputs and outputs for various sectors of the manufacturing industry, and 2) facilitating analyses of price fluctuations among sectors in the manufacturing industry.

2. Classification and weights

The Input Price Index covers raw and intermediate materials that include scrap and by-products used for production, fuel, and energy that are consumed in production processes (both domestic products and imports). Other inputs from service sectors, such as financial and insurance services, transportation, and telecommunications are not included in the Input Price Index. The Output Price Index covers manufactured products that include scrap and by-products (both domestic products and exports).

For the Input Price Index, the weights are based on the input values of goods (i.e., raw and intermediate materials, fuel, and energy) for the manufacturing industry at purchasers' prices in the I-O Tables during the base year 2000, published by the Ministry of Internal Affairs and Communications. For the Output Price Index, the weights are based on the values of domestic products for the manufacturing industry at producers' prices in the I-O Tables during the base year 2000.*

• Weights of Commodity group (described below) are calculated by using the weights of Commodity of the Corporate Goods Price Index (CGPI). In accordance with the revision from the 2000 base to the 2005 base, the weights of the 2000 base CGPI are used to compile the indexes for Jan. 2000-Dec. 2004, and those of the 2005 base for the indexes from Jan. 2005 onward.

The IOPI has two levels of sector classifications: the Manufacturing industry sector and the Major sector. The former consists of one category and the latter consists of 14 categories. Each sector has three levels of commodity groups: Aggregated major commodity group, Major commodity group and Commodity group (except for the Major sector in the Output Price Index, which is equal to Major commodity group). The Manufacturing industry sector also has sub-indexes of Domestic products and Imports for Input Price Index, and those of Domestic products and Exports for Output Price Index, respectively.

3. Base year for the index and the weight calculation

The base year is 2000 for both the index calculation and the weight calculation.

4. Price data (Selection of Commodities)

Commodity indexes in the CGPI are adopted in order to compile Commodity group indexes of the IOPI and they are the sole source for the IOPI price data.*1 The total number of selected Commodities amounts to 1,152 for the Input Price Index and 1,186 for the Output Price Index. In the 2000 base index, both the Input Price Index and the Output Price Index exclude the consumption tax.*2

1. *1In accordance with the revision of the CGPI, Commodity indexes in the 2000 base CGPI are adopted as the basis for the IOPI indexes for Jan. 2000-Dec. 2004, and those in the 2005 base CGPI for the IOPI indexes from Jan. 2005 onward. Therefore, Commodity group indexes of the IOPI which are not covered in the 2005 base CGPI are assumed to remain unchanged from Jan. 2005 onward.
2. *2Up to the 1995 base index, the consumption tax was excluded only in the compilation for Exports in the Output Price Index. This difference in the compilation procedure caused fluctuations in the Output/Input Price Ratio Index whenever the consumption tax rate was changed.

5. Index formula

The index formula is the fix-weighted Laspeyres formula. For details, refer to column 7, "Index formula for the CGPI."

6. Publication

In principle, the preliminary figures are released on the tenth working day of the following month and the final figures are released on the publication day of the month after that.*

• In April and October when periodic retroactive revisions are scheduled, the preliminary figures are released on the eleventh working day.

7. Notes on Usage

Since all price data for the IOPI are obtained from the CGPI, it should be noted that these price data include those collected from producers or wholesalers and those on CIF or FOB basis even though they are called input prices or output prices for the manufacturing sector.