Within-Country Price Variations: Evidence from ICP and CPI Data
Yuri Dikhanov1, Eileen P. Capilit2
1DECDG, World Bank, Washington, DC, United States; 2Asian Development Bank, Philippines

The International Comparison Project is primarily concerned with measuring international price variations expressed as the Purchasing Power Parities (PPPs). To this end the survey framework employed in the project is designed to produce average national prices. However, in 2005, for the first time in history of ICP, many countries gathered extensive information on prices from various geographical locations, thus presenting a great opportunity for studies of intra-country price variations. The paper discusses some results based on the 2005 ICP round in Asia.

At the same time, many countries carry out nation-wide price collection within their Consumer Price Index (CPI) framework. Unfortunately, the CPI data are not directly useable for geographic price comparisons, as they are built with temporal comparisons in mind. The CPI data need significant preparation and processing to be useful in intra-country price comparisons. The most important problem to solve is to identify identical, or equivalent, products, in order to compare like with like, as product description in CPI could be rather loose.

The Asian Development Bank, together with national statistical offices, conducted several country case studies on using CPI information in assessing the intra-country price variations. In particular, the Philippines case is presented in this paper in more detail as most advanced. In addition, the paper contrasts results from both CPI and ICP procedures for several other countries in Asia. The paper concludes with discussions on what those results mean for the development of ICP survey framework, and on the harmonization of inter-temporal and inter-spatial comparisons.

Keywords: Purchasing power parities; International comparison program; Consumer price index

Biography: Yuri Dikhanov is a Senior Economist in the Development Data Group of the World Bank and a member of the International Comparison Program Global Office. His interests include international comparisons of prices and real incomes, index number theory with applications to spatial and temporal indexes and global income distribution, in particular, in real (PPP) terms.