Rebasing the Services Producer Price Index to the Base Year 2020

The Bank of Japan plans to begin monthly releases of the Services Producer Price Index (SPPI) with the base year updated from the current 2015 to 2020, starting on June 25, when a preliminary index for May 2024 is to be published. In the 2020 rebasing, the Bank has focused on (i) reflecting changes in economic and industrial structures, (ii) initiatives for reducing the burden on reporting companies and improving index accuracy, (iii) setting the classification for enhancing the usability and accuracy of overall economic statistics in Japan, (iv) analyzing the effects of the COVID-19 pandemic and appropriately reflecting the effects in the SPPI, and (v) initiatives for improving the usability of the SPPI. As a result, the coverage has increased to 73.6 percent, as new services, such as "Business enterprise research and development," have been incorporated. In that process, new sample prices have been adopted to existing items in order to reflect changes in the economic structure. In addition, the reduction of the burden on reporting companies and the improvement of index accuracy have been simultaneously achieved through the utilization of alternative data and web scraping, and the improvement of quality adjustment. Moreover, the usability of the SPPI will also improve through the publication of the "Special aggregate index based on labor cost ratio" as a reference and the expansion of the scope covered by linked indexes. As to the developments of the "All items" index in the 2020 base SPPI, it has followed a trend that is not significantly different compared with the 2015 base. A closer look shows that although the difference is small, the index in the 2020 base SPPI shifted downward compared with the 2015 base between the middle of 2021 and the beginning of 2023. During the process of the rebasing, the Bank received cooperation for its surveys from many companies and valuable opinions from many experts and other knowledgeable people. The Bank will continue to engage in close exchange of opinions with companies and users and constantly consider ways of improving price statistics.