Definition: Output prices (Index)

Short-term statistics

2006 definition

It is the objective of the output price index to measure the monthly development of transaction prices of economic activities.

The domestic output price index for an economic activity measures the average price development of all goods and related services resulting from that activity and sold on the domestic market. The non-domestic price index shows the average price development (converted to local currency) of all goods and related services resulting from that activity and sold outside of the domestic market. When combined, these two indices show the average price development of all goods and related services resulting from an activity.

It is essential that all price-determining characteristics of the products are taken into account, including quantity of units sold, transport provided, rebates, service conditions, guarantee conditions and destination. The specification must be such that in subsequent reference periods, the observation unit is able uniquely to identify the product and to provide the appropriate price per unit.

The following rules apply for the definition of prices:

- The appropriate price is the basic price that excludes VAT and similar deductible taxes directly linked to turnover as well as all duties and taxes on the goods and services invoiced by the unit, whereas subsidies on products received by the producer, if there are any, should be added.
- If transport costs are included, this should be part of the product specification,
- In order to show the true development of price movements, it should be an actual transaction price, and not a list price.
- The output price index should take into account quality changes in products.
- The price collected in period t should refer to orders booked during period t (moment of order), not the moment when the commodities leave the factory gates.
- For output prices of the non-domestic market, the price should be calculated at national frontiers, fob (free on board).

The index should in principle reflect the average price during the reference period. In practice the information actually collected may refer to a particular day in the middle of the reference period that should be determined as a representative figure for the reference period. For products with a significant impact on the national economy that are known to have, at least occasionally, a volatile price development, it is important that the index does indeed reflect average prices.

Output prices for construction

Output price indices for construction can be used as an approximation for the construction cost variables. They measure only the development of residential buildings thus excluding residences for communities, non-residential buildings, land prices and architect’s and other fees. They reflect the prices paid by the client to the construction company. They therefore do not only reflect the variations in the cost factors of construction, but also the changes in productivity and profit margins. In addition, a temporal difference exists between the output price and the corresponding costs of production.

Output prices for services

The same definition applies to output prices for services, with the following exceptions:

- Output prices for services show the price development for services delivered to customers that are enterprises or persons representing enterprises.
- The reference period is quarterly.
- Domestic and non-domestic services are monitored.
- The appropriate price measure is the transaction price reflecting the revenue received by the producer for products actually sold to customers. They should take into account any applicable discounts, rebates, surcharges, etc. that may apply to the customers. Because the price reflects revenue received by the producer, taxes on products should be excluded from prices whereas subsidies on products received by the producer, if there are any, should be added.

The price should be recorded at the date of delivery of the service. If the service delivery spans over several time periods, appropriate adjustments have to be made.
Source:
European Union, Commission Regulation (EC) No 1503/2006 of 28 September 2006 implementing and amending Council Regulation (EC) No 1165/98 concerning short-term statistics as regards definitions of variables, list of variables and frequency of data compilation
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