EXPLANATIONS OF THE TABLES
A. VALUE ADDED TAX - VAT
1. In the price indices of inputs in the various industries – construction, road construction, buses, hotels and agriculture – as well as the price index of agricultural output, the prices measured do not include VAT.
2. For practical purposes, in order to calculate the price index regarding indices of components that do not include VAT, but in principle have VAT levied on them, they may be multiplied by the coefficients listed in the table, in order to express the influence of VAT on them.
Period Coefficient for calculating input indices, including the influence of VAT July 1976-October 1977 1.08 November 1977-May 1982 1.12 June 1982 1.1349 July 1982 – May 1985 1.15 June 1985 1.17 July 1985 – February 1990 1.15 March 1990 – December 1990 1.16 January 1991 – December 1992 1.18 January 1993 – 14 June 2002 1.17 15 June 2002 – February 2004 1.18 March 2004 – August 2005 1.17 September 2005 – June 2006 1.165 July 2006 – June 2009 1.155 July 2009 and after 1.165
B. REDUCTION OF INDICES
In some years, price indices are presented in fewer figures. In order to compare these indices with years in which the indices are displayed with complete figures, they must first be multiplied by the appropriate multiplication coefficient. The following are the multiplication coefficients for the indices and periods in which the reduction occurred.
Index Multiplication Period coefficient Index of Input Prices in Residential Building 1 Index of Input in Prices in Road Construction 10 1985 to January 1996 Price Indices of Input and Output in Agriculture 1,000 1985-1986 Index of Input Prices in Buses 100 1985-1993 C. PERCENTAGES OF CHANGE – MONTHLY AND YEARLY – METHOD OF CALCULATION IN THE INDEX TABLES
Percentage of Monthly Change The percentage of monthly change expresses the change that occurs between the most recent index published and the index of the previous month, in percentages. The following formula is used to calculate the percentage of change:
(Most recent monthly index) Percentage of monthly change = ------X 100 – 100 (Previous monthly index)
Percentage of Yearly Change The percentage of yearly change expresses the change that occurs between the most recent monthly index published, and the index of the same month in the previous year. The method of calculation is similar to the one used for the percentage of monthly change, and is based on the following formula:
(Most recent monthly index) Percentage of yearly change = ------X 100 – 100 (Index of same month in the previous year)
D. AVERAGE PRICES
For a variety of materials, commodities and services, average prices are published. These prices are based on the actual amount collected in every transaction, and are obtained from a sample of reports, according to the type of index (shops, businesses, establishments, etc.).
Average prices include taxes, discounts, and various duties and may or may not include VAT, depending on the type of index (see Section A above).
In contrast to the indices, average prices do not include changes in terms of payment and accompanying credit, and they reflect potential changes in the composition of the reporting parties. For those reasons, average prices should not be used to calculate the percentage of change from one period to another.
Average prices are intended only as an indicator of the amounts of prices during a given period.
E. AVERAGE ANNUAL INDEX The average annual index of most indices and their components is calculated as the arithmetic mean of 12 monthly indices.
F. CALCULATION OF PERCENT CHANGE, CHAINING OF INDICES AND LINKAGE
Main Uses of the Indices The index is used for various types of linkage, adjustment of series values, and analysis of price trends in a given industry or market, or in the general economy.
Detailed information on the goals and objectives of usage is provided in the publications and appendices listed in the section on “Definitions of the Indices”. An explanation of how to use the data is provided below.
1. Calculating Percentages of Change In order to calculate the change in an index from one month to another, it is necessary to determine that those indices are presented according to the same base.
Percentage of change is calculated on the basis of the formula below:
(Index of the later month) ------X 100-100 = Percentage of change for the month or period (Index of the earlier month)
For example, if it is necessary to calculate the percentage of change in the Consumer Price Index from September 2000 to December 2000, the publications of the CBS will indicate that those two indices are presented according to the same base:
(1) The CPI for September 2000 was 106.1 points, based on the average 1998=100.0. (2) The CPI for December 2000 was 106.6 points, based on the average 1998=100.0.
Calculating the Percentage of Change:
106.6 ------X 100 – 100 = 0.47 percent 106.1
In order to calculate the monetary value linked to the CPI, it is not necessary to calculate the percentage of change. Rather, the value can be calculated according to the increase in the index from one month to another or from one period to another by calculating the ratio of the indices:
The formula for calculating the factor of the rise in the index is as follows:
(Index of the later month) ------= The factor of the rise in the index (Index of the earlier month)
Based on those measures, the result of the calculation will be: 106.6 ------= 1.0047 106.1 The linked monetary value of NIS 200 can also be calculated by directly multiplying the ratio of the indices by their sum, as follows:
106.6 ------x NIS 200 = NIS 200.94 106.1
If the indices are not originally presented according to the same base, they should first be chained, and then presented according to a uniform base. For a description of the method of chaining indices, see the explanation below.
2. Chaining Indices
Every few years, the Central Bureau of Statistics updates the index “baskets”, and publishes the consumer price indices according to a new base that begins with 100 points.
In order to compare the periods for which different bases were calculated, it is first necessary to chain the indices, and create a uniform base. In general, the series of indices according to the new base is chained to the same series according to the old base. The general formula for chaining is to multiply the indices that use the new base by a chaining coefficient.
The chaining coefficient is the index of the new base period, which is computed according to the old base divided by 100.
The following are several examples taken from various indices, which demonstrate how indices from different periods are chained (the data were taken from tables in this publication and in previous publications).
Example A: Chaining the Consumer Price Index – The General Index
Comparison of the December 2000 and the December 2002 indices, which were originally calculated according to different bases:
(1) The December 1998 index was 166.3 points, based on the average 1993 = 100.0.
(2) The December 2000 index was 106.6 points, based on the average 1998=100.0.
The December 2000 index is chained and brought to the 1998 base.
The chaining coefficient is the old index of 1998, which was 158.1 points according to the 1993 base, divided by 100.
158.1 Therefore, the chaining coefficient for this calculation is: ------= 1.581 100.0 The December 2000 index chained to the 1993 base is: 106.6 x 1.581 = 168.5346
Now it is possible to calculate the percentages of change and linkage between the December 1998 index and the chained December 2000 index.
In the Consumer Price Index – the general index – a series of chained indices has been calculated for every year from September 1951, on a uniform basis. Based on these indices, it is possible to calculate the percentages of change between every two months, without having to calculate chained indices.
However, if we want to chain the indices of groups, sub-groups, and items for which chained indices have not been calculated, it is necessary to carry out the chaining procedures, as specified above, using the chaining coefficients that are appropriate for the index that we wish to chain. The indices used to calculate the chaining coefficients of groups, sub-groups, and items are listed in the previous publications for the appropriate periods.