Experimental index to be improved
The experimental Corporate Service Price Index (CSPI) has been rebased to the year 2000. The rebased series was published with the Q4 2003 release on 20 February 2004. ONS has taken this opportunity to implement a number of improvements to the CSPI, which have been introduced with the rebased series.
For the first time, the CSPI was released as both net and gross sector time-series, aligning with the PPI release format. Many aspects of the methods and sources used to compile the CSPI have been reviewed and updated.
We have also introduced a redeveloped business-telecommunications index and new banking (loans and interest bearing deposits) index. The introduction of the new index has increased the number of published, industry-level CSPIs to 32.
ONS has also expanded substantially the survey of businesses on which the CSPI is based. We now survey 1,500 businesses, seeking price quotes for 5,000 service-products. The improvements have led to revisions from 1995, the first date for which CSPI information is available.
The rebased CSPI depicts an overall, slower rate of growth than the 1995 based series. The CSPI now indicates a short period of negative price growth in both the net-sector and gross-sector series, around the year 1999.
The reduced and negative growth of the CSPI series may be attributed to a number of sources. The impact of rebasing on the headline CSPI growth, contributes around half of the growth reduction between 1998 to 2000. It also accounts for nearly all the growth change in subsequent quarters.
The introduction of the redeveloped business telecommunication CSPI makes up almost all the remaining growth difference. The largest contribution to growth reduction (causing a short period of negative growth) was around 1999 when the telecommunication-service prices were in strong decline.
The redeveloped business-telecommunication series replaces a relatively flat CSPI industry index with a steep and long term decline in prices. This better reflects the market understanding of the data providers, Ofcom. The impact on the headline CSPI of the new banking index has been relatively small. The new banking CSPI has contributed a small positive growth to the headline CSPI.