Analysing consumer price changes by using input-output tables

Abstract

At the Netherlands Central Bureau of Statistics a method has been developed which provides insight into the relationships between developments in input costs and output prices. This method is based on input-output theory and is called “Price Analysis”. Starting from 1985, the Netherlands Central Bureau of Statistics is to issue an annual publication on this price analysis for the Dutch economy. The method takes into account the relationship between changes in input prices and in unit costs of inputs. Applications related to consumer price changes elucidate the transmission of price changes through the economy and the treatment of price and unit cost effects. Both aspects can be illustrated by an example relating to energy. The scope can be widened from just the energy branches to an analysis of the contributions of all branches of industry to consumer price changes. Finally, consumer price changes can be analysed in an alternative way by means of contributions of primary inputs, like imports, wages, etc.