2010-Base Explanation of the Consumer Price Index

Preface

  The calculation of the Consumer Price Index (CPI) started in August 1946 in Japan. After several revisions, the Statistics Bureau, the Ministry of Internal Affairs and Communications revised the base period and the weight reference period to the calendar year 2010 in August 2011, which is the fourteenth revision.
  This manual explains the method of index calculation and main points of the 2010-base revision of the CPI in detail.

March 2012
Ministry of Internal Affairs and Communications, Statistics Bureau

Contents

I Outline of the 2010-Base Consumer Price Index(PDF:448KB)

1 Characteristics of the index .......................................................................................................................................................................................    1

2 Outline of the index ...................................................................................................................................................................................................    1

3 Index series available ................................................................................................................................................................................................    2

4 Publication of the CPI ................................................................................................................................................................................................    4

[Reference] Treatment of the housing services of owner-occupied houses .................................................................................................................    5

II Outline of the 2010-Base Revision of the Consumer Price Index(PDF:448KB)

1 Introduction ...............................................................................................................................................................................................................    6

2 Aim of the revision .....................................................................................................................................................................................................    6

3 Main points of the revision .........................................................................................................................................................................................    6

(Appendix) Index items revised for the 2010 base ........................................................................................................................................................   11

III Calculation of the Consumer Price Index

Chapter 1 Calculation of the prices in the observation period (Pt)(PDF:448KB)

1 Calculation of the prices in the observation period ....................................................................................................................................................   13

2 Substitution of the prices in the observation period ...................................................................................................................................................   14

Chapter 2 Quality adjustment during calculation of the prices in the observation period(PDF:448KB)

1 Necessity for quality adjustment of the prices in the observation period ....................................................................................................................   15

2 Method of quality adjustment .....................................................................................................................................................................................   15

Chapter 3 Calculation of the prices in the base period (P0)(PDF:448KB) .....................................................................................................................   21

Chapter 4 Calculation of the weight (W0)(PDF:448KB)

1 Scope of the Family Income and Expenditure Survey (FIES) items adopted for the weights .......................................................................................   22

2 Calculation of the weights for the basic classification indices ......................................................................................................................................   23

3 Calculation of the weights for the goods and services classification ............................................................................................................................   26

4 Calculation of the weights for index based on baskets of specific household groups ..................................................................................................   26

Chapter 5 Method of index calculation and the index series(PDF:448KB)

1 Index formula ...............................................................................................................................................................................................................   28

2 Process of the index calculation ...................................................................................................................................................................................   28

3 Process for the case when the prices in the observation period are not available .......................................................................................................   29

4 Calculation of average indices for calendar year, fiscal year and so on .......................................................................................................................   29

5 Calculation of the rate of change ..................................................................................................................................................................................   30

6 Calculation of the contribution to the total change and the rate of contribution ............................................................................................................   30

7 Index series ..................................................................................................................................................................................................................   31

Chapter 6 Linking of new and old indices(PDF:448KB)

1 Method of linking new and old indices  .........................................................................................................................................................................   38

2 Range for calculating linked indices  ............................................................................................................................................................................   39

3 Notice for the use of linked indices ...............................................................................................................................................................................   41

Chapter 7 Seasonal Adjustment(PDF:448KB)

1 Calculation method of seasonally adjusted indices .......................................................................................................................................................   42

2 Data used to calculate seasonally adjusted indices ......................................................................................................................................................   42

3 Recalculation of seasonally adjusted indices ................................................................................................................................................................   42

4 Available series of seasonally adjusted indices .............................................................................................................................................................   42

[Reference] Method of seasonal adjustment ....................................................................................................................................................................   43

Appendix 1 Calculation of the price index for PCs and cameras by Hedonic approach(PDF:448KB) ................................................................................   44

Appendix 2 Calculation method of model items(PDF:448KB) ............................................................................................................................................   46

Appendix 3 Calculation of the weights for the imputed rent(PDF:448KB) ..........................................................................................................................   49

Appendix 4 Calculation of the CPI by midpoint-year basket method(PDF:448KB) .............................................................................................................   57

IV List of information for items of the 2010-Base Consumer Price Index(PDF:448KB) .......................................................................................................   60