Release of a Reference Wholesale Price Index Using a Geometric Mean Formula

In recent years, concern about the accuracy of price statistics has risen in industrialized countries where the statistical bias in price indexes seems to have grown significantly while actual prices have generally been stable. The Bank of Japan has worked to improve the accuracy of its Wholesale Price Index (WPI) over the years, but many problems remain to be solved. One such issue is the formula used for calculating the index. Recently, the Bank decided to publish a reference WPI using a geometric mean formula (WPI-UGM) in addition to the conventional index using arithmetic mean method (Laspeyres index). Although the new formula may not succeed in removing the bias in the current index, the Bank considers that by publishing more data, it can provide users with more information about the possible measurement bias in the present WPI.