STATIN Launches Producer Price Index

The Statistical Institute of Jamaica (STATIN), has launched its Producer Price Index (PPI), a tool which will be used for economic analysis.
Addressing the launching ceremony yesterday (March 27), at the Hilton Hotel in Kingston, Governor of the Bank of Jamaica, Derick Latibeaudiere commended the Institute for producing the new index, adding that the BOJ depended heavily on the macro-economic data produced by the agency.
He informed that the index is designed to measure prices at the production level, in accordance with internationally recognized standards. “The PPI was developed to conform to international standards and is therefore another step in Jamaica’s progression towards a world class system of national statistics,” Mr. Latibeaudiere said.
The PPI will measure the percentage change in a set of prices over time and the monthly rate of change in the price of products as they leave the producer.
Mr. Latibeaudiere pointed out that the PPI has an important role to play in the Jamaican economy, as it was a short term indicator of inflationary trends.
“The change in the PPI is an important pointer to future consumer price inflation and in developed economies, the PPI is closely watched,” he said, adding that, “while the PPI will not capture the prices of imported finished goods, which in Jamaica account for a significant portion of the consumption basket, it will be an important indicator in the analysis of underlying inflationary pressures.”
Meanwhile, Deputy Director General of STATIN, Annette McKenzie, cited the importance of the PPI as it relates to determining inflationary trends. She noted that because the PPI is calculated from the perspective of the producer, it could be used to predict future increases for the consumer.
“The advantage of the PPI is that it detects prices in the early production process and their movements could foreshadow future changes in the consumer prices,” she informed.
The usefulness of the PPI is not only limited to macro-economic analysis, as it can be of value to the private sector in deflating other economic time series, such as inventories and sales, determining price escalation; clauses in contracts; assisting in revenue projections and market analysis and in analyzing industry price trends.
STATIN will be publishing Producer Price Indices for the mining and manufacturing industries, with a view to including more sectors at a later date.