Estimating Missing Prices in Producer Price Index

Onimissi M. Sheidu


The Producer Price Index (PPI) is a monthly estimate of average changes in prices received by domestic producers of goods and services in all stages of processing. Each month the PPI requests data for more than 100,000 price quotes. For data not received, the PPI must estimate a value. In this paper, we investigate whether there is an advantage in terms of improving the accuracy of the estimates by using only the weighted relatives of items in a cell with similar products to estimate an item's missing price, or to use higher aggregate cell relatives comprised of different product cells. We discovered the proposed method of estimating missing prices using detailed product cell relatives is superior only in cases where there are enough items, usually greater than 10, in a cell.