SUNDAY, JULY 31, 1983
SEASONAL ADJUSTMENT OF PRICE INDEXES EXPLAINED
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A SPECIAL REVIEW ARTICLE ENTITLED AN INTRODUCTION TO THE SEASONALLY ADJUSTED CONSUMER PRICE INDEXES+ IS PUBLISHED IN THE MAY 1983 ISSUE OF THE HONG KONG MONTHLY DIGEST OF STATISTICS.
THIS EXPOSITORY PAPER EXPLAINS WHAT SEASONAL ADJUSTMENT IS AND PRESENTS THE OBJECTIVES, METHODS AND RESULTS OF SEASONAL ADJUSTMENT ON THE CONSUMER PRICE INDEXES.
IT ALSO PROVIDES A GUIDE-LINE FOR INTERPRETING THE RESULTANT SEASONALLY ADJUSTED FIGURES CORRECTLY.
THE PRICES OF MANY COMPONENT ITEMS IN THE CONSUMER PRICE INDEX ARE SUBJECT TO SEASONAL INFLUENCES WHICH ARE USUALLY CAUSED BY WEATHER CHANGES AND SOCIAL AND COMMERCIAL CUSTOMS.
THESE SEASONAL VARIATIONS IN PRICES ARE PERIODIC IN NATURE AND RECUR REGULARLY WITHIN A PERIOD OF ONE YEAR. THIS MEANS THAT PRICES ARE RELATIVELY HIGH DURING SOME MONTHS OF THE YEAR BUT RELATIVELY LOW DURING OTHERS. SEASONAL ADJUSTMENT TAKES OUT THE SEASONAL VARIATIONS IN THE OBSERVED PRICE INDEXES.
THE RESULTANT CONSUMER PRICE INDEXES ARE THEN DESCRIBED AS SEASONALLY ADJUSTED AND PLAY AN IMPORTANT ROLE IN THE ANALYSIS OF CURRENT ECONOMIC CONDITIONS.
THE SEASONALLY ADJUSTED SERIES REVEAL A CLEARER AND MORE
BETTER ACCURATE TREND MOVEMENT THAN THE UNADJUSTED SERIES. MONTH-TO-MONTH COMPARISON TO DEPICT CURRENT DEVELOPMENTS IN CONSUMER PRICES AND MORE ACCURATE ANALYSIS FOR THE FORMULATION OF ECONOMIC POLICY CAN THUS BE MADE.
THE METHOD EMPLOYED IS THE X-11-ARIMA SEASONAL ADJUSTMENT METHOD+ DEVELOPED BY STATISTICS CANADA WHICH IS ADOPTED BY MANY COUNTRIES FOR THIS PURPOSE.
FURTHER DETAILS ON THE SEASONAL ADJUSTMENT OF CONSUMER PRICE INDEXES ARE CONTAINED IN THE REVIEW ARTICLE.
THE HONG KONG MONTHLY DIGEST OF STATISTICS WILL BE ON SALE SHORTLY AT THE GOVERNMENT PUBLICATIONS SALES CENTRE, GENERAL POST OFFICE BUILDING, CONNAUGHT PLACE, HONG KONG AT $25 PER COPY.
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