Note on Pricing more Global Core Items

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    At its meeting on 20 February 2011, the Executive Board requested “….the TAG to submit by May 2011, through the Global Office, a technical note on the regional and/or global PPP impact, if any, of China’s pricing all 601 items from the Global Core list, instead of the sole subset of it which all economies in the Asia and Pacific region jointly agreed to include in their price surveys” (item 6). The TAG considered this request at its meeting on 18, 19 April 2011. It recommended that an economy/country willing to price more products from the Global Core List than the other economies in the region should not be prevented from doing so. As regards the impact aspect, the TAG underlined that this will have no effect on the regional comparison. However, the consensus amongst TAG members was that it is impossible at present to assess the impact at global level because it depends on the deviation of the additional prices from the economy’s general price level as well as that of the prices for corresponding products submitted by other countries. An analysis by the Global Office suggests that the impact on the regional PPPs should be relatively small. For example, a 10% deviation in the prices for the extra 211 global core products priced by China but not being priced by other countries in the Asia-Pacific region would lead to a change of about 0.2% in the PPP levels of the region compared to those in other regions. However, it will not be possible to confirm the actual impact until the prices are received. The TAG agreed that the extra products priced by a particular economy/country must be classified correctly as “important/less important”. Any outliers identified by a statistical analysis should be discarded from the inter-region linking (in this context, the TAG noted that approximately 20% of ring product prices were discarded during the outlier analysis phase of the 2005 ICP).