Status
The variant of the North American Product Classification System (NAPCS) Canada 2017 for the Industrial Product Price Index (IPPI) was approved as a departmental standard on October 16, 2017. The new IPPI variant is based on NAPCS Canada 2017 Version 2.0, and replaces the previous IPPI variant based on NAPCS Canada 2012 Version 1.1.
Changes
The Industrial Product Price Index measures price changes for major commodities sold by manufacturers in Canada. As our economy evolves, changes in our products must be reflected in the product classification used. Subsequent to the release of the updated NAPCS Canada 2017 Version 2.0, the variant for IPPI has been updated.
Changes to any variant may originate from modifications applied to the standard classification it is based on, as well as from revisions to the structure of the variant itself.
Changes to the standard classification are described in the introduction of each new version of NAPCS Canada. NAPCS Canada 2017 Version 2.0 mainly reflects the response to the legalization of cannabis for non-medical use. Additional to those major changes, some categories were split, such as cigarettes and e-cigarettes, and others were merged, such as men’s and women’s athletic footwear. New categories were incorporated and some were deleted or transferred, such as peanut butter. More details were added to some categories, such as maple syrup products, beers, wines and ciders and battery chargers for electric automobiles, improving relevancy to statistical programs and users. The structure of the IPPI variant was not affected by most of these changes, other than the addition of a new section under P15 created for “Cannabis products (except seeds, plants, plant parts and fresh cannabis)”.
Background
In order to create a price index, price data is aggregated into distinct product classes. From the 1980s until 2013, the product classification system used by the IPPI was the Principal Commodity Groups. However, changes in the economy required periodic updates in the classification systems. Following the approval of NAPCS Canada 2012 as a departmental standard, the IPPI and the Raw Materials Price Index (RMPI) variants were approved as departmental standards on May 2013.
NAPCS is a product classification developed and updated jointly by Canada, Mexico and the United States. NAPCS Canada is the Canadian version, and has a different structure than the trilateral NAPCS (for more details, see the introduction of NAPCS Canada 2017 V2.0). NAPCS Canada has been implemented by most Statistics Canada programs that have a “product” (goods and services) dimension. As new updated versions of NAPCS Canada are created, the IPPI is also updated.
The IPPI reflects the prices that manufacturers in Canada receive as goods leave the plant gate. It excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including transportation, wholesale and retail costs.
The IPPI is produced and published together with the Raw Materials Price Index (RMPI). Both indexes are of value in analytical studies of price formation and historical comparisons. Both the IPPI and RMPI are used to calculate the real Gross Domestic Product (GDP) by industry.
The IPPI employs a regrouping variant, it introduces alternative aggregate levels by regrouping categories of NAPCS Canada, the base statistical classification. In the IPPI variant, NAPCS Canada is generally aggregated at the three-digit group level and, to a lesser extent, at the five-digit class level. The coding is alphanumeric and each variant has its own codes at the section and/or group levels. For example, in the IPPI, a letter and two digits are used for the 21 section codes (i.e., P11 to P92).
One of the purposes of the six-digit subclass level in NAPCS Canada 2017 is to support the IPPI and RMPI programs. There are 1,470 subclasses at the six-digit level of NAPCS Canada Version 2.0, of which 671 are included in the IPPI and 103 in the RMPI.
Hierarchical structure
The structure of the NAPCS Canada 2017 Version 2.0 variant for IPPI is hierarchical. It is composed of five levels.
- level 1: section (three-character alphanumeric codes)
- level 2: group (three-digit standard codes and four-character alphanumeric codes
- level 3: class (five-digit standard codes and six-character alphanumeric codes)
- level 4: subclass (six-digit standard codes)
- level 5: detail (seven-digit standard codes)