Some examples of Quality changes in the Korean CPI

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Some examples of Quality changes in the Korean
CPI
KNSO

• Jinho Hur, National Statistical office of Korea

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Contents
Example 1. Price in services
Salad price at Pizza Hut
Example 2. Sales Prices
Example 3. Long term rent price
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Example 1. Price in services
Salad price at Pizza Hut
1) Situation
Date 2007.9 2007.10
price 8,900 won 6,500 won
For 14 persons For 12 persons
Additional cost for one person 1,500 won 2,000 won
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Example 1. Price in services
Salad price at Pizza Hut
2) Alternative solutions considered
considering price
1) No change 0
2) Compared for 4 persons 8,900won-gt10,500won(18)
3) Compared for 3 persons 8,900won-gt8,500won(-4.5)
3) Conclusion
Solution 3 selected as the most representative
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Example 2. Sales Prices
1) Price collecting method of the manufactured
goods

Collecting date Once a month, usually between the 10th and 15th in the month
Sales price Reflected without considering the length of the sales period
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Example 2. Sales Prices
2)-1 New rules
At least 7 days of sales length is needed to reflect the sale price
2)-2 Examples
IF) Normal price 2,000 won , Sale price 1,500 won IF) Normal price 2,000 won , Sale price 1,500 won
Sale period The price we take
At least seven days 1,500 won
Less than seven days 2,000 won
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Example 3. Long term rent price

• Chunsei
• Unique situation on the market for rented
  dwelling in Korea
• Deposit made to the owner of the dwelling, the
  lessor, as a kind of security
• It corresponds to approximately 2 years rent and
  is paid by the lessee the at the beginning of the
  renting period
• After a period of two years, the chunsei money is
  paid back to the lessee. If the rental agreement
  is prolonged, the chunsei has to be paid again.

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Example 3. Long term rent price

• The weight of chunsei in the CPI is 66.4/1000
• The weights is calculated by converting the
  amount paid in chunsei from the 2005 Census into
  an imputed monthly rent, and dividing by total
  consumption expenditure

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Example 3. Long term rent price

• Price collectors collect price data each month
  from all the chunsei sample household as if it
  were monthly rent
• Example
• If 20 household are surveyed and if one
  households chunsei money increased by 10 and
  the other 19 households have not changed,
• Then, we calculate 10 divied by 20
  households(simplified for calculation)
• gt 0.5

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Example 3. Long term rent price

• Raised critcism
• CPI should report a 10 increase rather than
  0.5 in this case.
• what is your opinion about this
  criticism?