PPI and Measuring Inflation in Business Transactions in Egypt

This paper discusses and analyzes selected pertinent statistical and economic questions raised by the shift in price statistics towards covering broader markets of the economy, namely introducing a Producers Price Index (PPI) series in place of the Wholesale Price Index (WPI) series in Egypt since the beginning of 2008. The paper discusses the price index gap in Egypt and the methodology employed in constructing the newly-introduced PPI. The paper proposes tackling several characterized problems concerning the construction of the elementary indices and quality of PPI statistics in light of e-commerce and globalization, existing limited coverage of service sectors, and improper indices for cost escalation and contracting. The paper also proposes devising a core inflation measure for inflation targeting in Egypt.