Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination (Text with EEA relevance )

Article 1

Objective

The objective of this Regulation is to establish common rules for the provision of basic information on PPPs, and for their calculation and dissemination.

Article 2

Scope

The basic information to be provided shall be those data necessary to calculate and ensure the quality of PPPs.

That basic information shall include prices, GDP expenditure weights and other data listed in Annex I.

Data shall be collected with the minimum frequency provided for in Annex I. More frequent collection of data shall take place only in exceptional and justified circumstances.

Article 3

Definitions

For the purpose of this Regulation the following definitions shall apply:

(a) ‘Purchasing Power Parities’ (‘PPPs’) shall mean spatial deflators and currency converters that eliminate the effects of the differences in price levels between Member States thus allowing volume comparisons of GDP components and comparisons of price levels.

(b) ‘Purchasing Power Standard’ (‘PPS’) shall mean the artificial common reference currency unit used in the European Union to express the volume of economic aggregates for the purpose of spatial comparisons in such a way that price level differences between Member States are eliminated.

(c) ‘Prices’ shall mean the purchaser prices paid by the final consumers.

(d) ‘Expenditure weights’ shall mean the shares of expenditure components in current-price GDP.

(e) ‘Basic heading’ shall mean the lowest level of aggregation of items in the GDP breakdown for which parities are calculated.

(f) ‘Items’ shall mean goods or services precisely defined for use in price observation.

(g) ‘Actual and imputed rentals’ shall have the meaning attributed to it in Commission Regulation (EC) No 1722/2005 (¹).

(h) ‘Compensation of employees’ shall have the meaning attributed to it in Regulation (EC) No 2223/96.

(i) ‘Temporal adjustment factors’ shall mean factors used to adjust average prices obtained at the time of survey to annual average prices.

(j) ‘Spatial adjustment factors’ shall mean factors used to adjust average prices obtained from one or more locations within the economic territory of a Member State to national average prices.

(k) ‘Representative items’ shall mean those which are, or are considered to be, in terms of relative total expenditure within a basic heading, among the most important items purchased in national markets.

(l) ‘Representativity indicators’ shall mean markers or other indicators identifying those items that Member States have selected as representative.

(m) ‘Equi-representativity’ shall mean a property required of the composition of the item list for a basic heading, each Member State being able to price that number of representative products which is commensurate with the heterogeneity of the products and price levels covered by the basic heading and its expenditure on the basic heading.

(n) ‘Transitive’ shall mean the property whereby a direct comparison between any two Member States yields the same result as an indirect comparison via any other Member State.

(o) ‘Mistake’ shall mean a use of incorrect basic information or an inappropriate application of the calculation procedure.

(p) ‘Reference year’ shall mean a calendar year to which specific annual results refer.

(q) ‘Fixity’ shall mean that when results are calculated originally for a group of Member States and then later the results are calculated for a wider group of Member States, the PPPs between the original group of Member States shall nevertheless be preserved.

Article 4

Roles and responsibilities

The Commission (Eurostat) shall be responsible for:

(a) coordinating the provision of the basic information;

(b) calculating and publishing PPPs;

(c) ensuring the quality of PPPs, in accordance with Article 7;

(d) developing and communicating methodology, in consultation with the Member States;

(e) ensuring that the Member States have the opportunity to comment on PPP results prior to publication and that due account be taken of any such comment; and

(f) drafting and disseminating the methodological manual referred to in point 1.1 of Annex I.

Member States shall follow the procedure set out in Annex I when providing basic information.

Member States shall provide written approval of the survey results for which they are responsible, once the process of data validation has been completed, as specified in point 5.2 of Annex I, within a period of no longer than one month.

Member States shall approve the data collection methodology and check the plausibility of data, including items of basic information provided by the Commission (Eurostat).

Article 5

Transmission of basic information

Article 6

Statistical units

Article 7

Quality criteria and control

Member States shall provide the Commission (Eurostat), at its request, with all information necessary to evaluate the quality of the basic information listed in Annex I.

Member States shall also provide the Commission (Eurostat) with the details and the reasons for any subsequent changes in the methods used or any deviation from the methodological manual specified in Annex I.

Article 8

Periodicity

The Commission (Eurostat) shall calculate PPPs with reference to each calendar year.

Article 9

Dissemination

The Commission (Eurostat) shall publish the final annual results no later than 36 months after the end of the reference year.

Publication shall be based on data available to the Commission (Eurostat) no later than three months before the publication date.

Nothing in this paragraph shall affect the right of the Commission (Eurostat) to publish preliminary results earlier than 36 months after the end of the reference year and the Commission (Eurostat) shall make these publicly available, including on its website.

The results published by the Commission (Eurostat) at an aggregated level for each Member State shall include at least the following:

(a) PPPs at the level of GDP;

(b) PPPs for private household consumption expenditure and actual individual consumption;

(c) price level indices relative to the Community average; and

(d) GDP, private household consumption expenditure and actual individual consumption and respective per capita figures in PPS.

Published final PPPs shall generally not be revised.

However, in the event of mistakes falling within the scope of Section 10 of Annex I, corrected results shall be published in accordance with the procedure laid down therein.

Exceptional general revisions shall be carried out if, owing to changes to the concepts underlying ESA 95 that affect PPP results, the volume index of GDP for any Member State changes by more than one percentage point.

Article 10

Correction coefficients

Member States shall not be required to undertake surveys solely for the purpose of establishing the correction coefficients to be applied to the remuneration and pensions of Community officials and other servants in accordance with the Staff Regulations.

Article 11

Committee procedure

Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply, having regard to the provisions of Article 8 thereof.

The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three months.

Article 12

Implementing measures

The following measures necessary for implementation of this Regulation shall be adopted in accordance with the regulatory procedure referred to in Article 11(2):

(a) the definition of a set of minimum standards in order to achieve the essential comparability and representativity of the data as specified under points 5.1 and 5.2 of Annex I;

(b) the definition of precise requirements as to the methodology to be used as specified in Annex I; and

(c) the establishment and adjustment of detailed descriptions of the content of basic headings, provided that these remain compatible with ESA 95 or any succeeding system.

The following measures designed to amend non-essential elements of this Regulation, inter alia by supplementing it with new elements, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 11(3):

(a) the adaptation of the definitions;

(b) the adjustment of the list of basic headings (as specified in Annex II); and

(c) the definition of quality criteria and the structure of the quality reports, pursuant to Article 7(4).

Article 13

Financing

Article 14

Review and report

The provisions of this Regulation shall be reviewed five years after its entry into force. It shall be revised, if appropriate, on the basis of a Commission report and proposal, submitted to the European Parliament and the Council.

Article 15

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX I

1. METHODOLOGICAL MANUAL AND WORK PROGRAMME

1.1. A methodological manual will be provided by the Commission (Eurostat), following consultation with the Member States, describing the methods used at the various stages of compiling PPPs, including the methods for estimating missing basic information and for estimating missing parities. The methodological manual will be revised whenever a significant change to the methodology is made. It may introduce new methods to improve data quality, reduce costs or lessen the burden on data suppliers.

1.2. The Commission (Eurostat) will establish, by 30 November each year and in consultation with the Member States, an annual Work Programme for the following calendar year setting out the timetable for the specification and the provision of the basic information required for that year.

1.3. The annual Work Programme will determine the format for provision of data to be used by the Member States, and any other actions necessary in order to accomplish the calculation and publication of PPPs.

1.4. The basic information supplied according to point 1.2 may be revised, but the results for the reference year will be calculated from information available according to the timetable specified in Article 9. Where information is not complete or not available at that date, the Commission (Eurostat) will estimate the missing basic information.

1.5. Should a Member State fail to submit complete basic information, it will specify why the information is incomplete, when it will submit complete information or, if appropriate, why complete information cannot be provided.

2. BASIC INFORMATION

2.1.   Basic information items

For the purpose of this Regulation, basic information pursuant to Articles 2 and 4 and the minimum frequency of new data supply will comprise and be provided as follows:

Basic information	Minimum frequency
GDP expenditure weights (1)	Annual
Actual and imputed rentals (2)	Annual
Compensation of employees	Annual
Temporal adjustment factors	Annual
Prices of consumer goods and services and related representativity indicators	3 years (3)
Prices of equipment goods	3 years
Prices of construction projects	3 years
Spatial adjustment factors	6 years
(1) These weights shall be consistent with the lowest level of available aggregates from national accounts. If the required detail is not available, the Member State may provide best estimates for the missing positions. (2) The dwellings stock quantity approach, as described in the methodological manual, may be used instead of the price approach in cases where actual rentals are missing or are statistically unreliable in line with Regulation (EC) No 1722/2005. (3) The minimum frequency refers to the provision of data for a particular product group, related to the rolling cycle of surveys.

2.2.   Procedure for obtaining basic information

The Commission (Eurostat), after taking account of the views of the Member States, will determine the sources and data suppliers to be used for each of the above items of basic information. If the Commission (Eurostat) obtains basic information from a data supplier other than a Member State, the latter will be relieved of the obligations set out in points 5.1.4 to 5.1.13.

3. NATIONAL AVERAGE PRICES

3.1. Notwithstanding the provisions of Article 2(2), data collection may be limited to one or more locations within the economic territory. Such data may be used for PPP calculations provided that they are accompanied by appropriate spatial adjustment factors. Such spatial adjustment factors will be used to adjust survey data in the relevant locations to those representative of the national average.

3.2. Spatial adjustment factors will be supplied at basic heading level. They will be no more than six years old at the reference period of the survey.

4. ANNUAL AVERAGE PRICES

Notwithstanding the provisions of Article 2(2), data collection may be limited to a specific period of time. Such data may be used for PPP calculations provided that they are accompanied by appropriate temporal adjustment factors. Such temporal adjustment factors will be used to adjust survey data in this period to those representative of the annual average.

5. QUALITY

5.1.   Minimum standards for basic information

5.1.1. The list of items to be priced will be designed to comprise items whose specifications ensure comparability between countries.

5.1.2. The list of items to be priced will be designed so that each Member State can indicate at least one representative item which can be priced in at least one other Member State for each basic heading.

5.1.3. The item list will be designed in order to achieve the highest practicable level of equi-representativity so that, as a minimum, each country has to price one representative item for each basic heading and this representative item has to be priced by at least one other country.

5.1.4. Each Member State will price items according to the specifications in the item list.

5.1.5. Each Member State will price a sufficient number of items within each basic heading that are available in its market, even though they may not be considered as representative of that basic heading.

5.1.6. Each Member State will supply prices of at least one representative item within each basic heading. The representative items will be indicated by a representativity indicator.

5.1.7. Each Member State will collect a sufficient number of price quotations for each item priced to ensure a reliable average price per item taking account of its market structure.

5.1.8. The selection of outlet types will be designed to adequately reflect the domestic pattern of consumption within the Member State according to the item.

5.1.9. The outlet selection in a location will be designed to adequately reflect the pattern of consumption of the residents of the location and the availability of items.

5.1.10. Each Member State will supply the Commission (Eurostat) with data on compensation of employees for selected occupations with reference to the sector General Government (S 13) as defined in ESA 95.

5.1.11. Each Member State will supply the Commission (Eurostat) with temporal adjustment factors which allow calculation of PPPs from prices collected at a specific time which adequately reflect the annual average price level.

5.1.12. Each Member State will supply the Commission (Eurostat) with spatial adjustment factors which allow calculation of PPPs with prices collected in specific locations which adequately reflect the national average price level.

5.1.13. Each Member State will supply the Commission (Eurostat) with weights relating to each basic heading as specified in Annex II which reflect the expenditure pattern in the Member State for the reference year.

5.2.   Minimum standards for the validation of price survey results

5.2.1. Each Member State will, before transmitting the data to the Commission (Eurostat), carry out a review of data validity based on:

5.2.2. An electronic tool containing the algorithms required for the purposes of point 5.2.1 will be supplied by the Commission (Eurostat) to the Member States.

5.2.3. The Commission (Eurostat) will, before finalising the survey results, carry out validity checks, in conjunction with the Member States, based on indicators including: For each basic heading: For each item:

5.2.4. The Commission (Eurostat) will, before finalising the PPP results at aggregate level, carry out validity checks based on indicators including: At the level of total GDP and its main aggregates: At the level of each basic heading:

5.3.   Reporting and assessment

5.3.1. Each Member State will maintain documentation which gives a full description of the manner in which this Regulation has been implemented. This documentation will be available to the Commission (Eurostat) and the other Member States.

5.3.2. Each Member State will have its PPP process assessed at least once every six years by the Commission (Eurostat). The assessments, planned annually and included in the annual Work Programme, will review compliance with this Regulation. A report, based on the assessments, will be made by the Commission (Eurostat) and be made publicly available, including on its website.

5.3.3. In accordance with Article 7(3), shortly after each consumer price survey, a report by the Member State responsible will be given to the Commission (Eurostat) providing information on the way in which the survey was conducted. The Commission (Eurostat) will provide each Member State with a summary of these reports.

6. CONSUMER PRICE SURVEY PROCEDURE

6.1. Member States will carry out the price surveys according to the Work Programme.

6.2. For each survey, the Commission (Eurostat) will prepare the survey item list, based on proposals which will be made by each Member State for each basic heading.

6.3. The Commission (Eurostat) will provide, together with the item list, in all official languages of the European Union, a translation of all specifications in each survey list.

7. CALCULATION PROCEDURE

7.1.   Calculation of bilateral parities at basic heading level

(a) The calculation of multilateral Èltetò-Köves-Szulc (hereinafter referred to as ‘EKS’) parities at basic heading level will be based on a matrix of bilateral parities for each pair of participant countries.