Towards measuring purchasing power parity across OECD regions

Currently, there are no harmonised measures of subnational price differences and inflation across the OECD. Despite efforts by some member countries, significant data gaps persist, with most countries lacking dedicated subnational price indicators. Consequently, national CPI and PPP data are often used in subnational analyses, which may result in distortions when assessing the cost of living, economic conditions, and subnational economic performances.

The absence of regional price data makes it challenging, if not impossible, to obtain consistent and accurate information for comparing people's living conditions and purchasing power across OECD regions. 

• Comprehensive stocktaking and methodological assessment -- The project systematically reviews existing subnational PPP and CPI data from official national sources, assessing current methodologies and identifying key challenges and data requirements for developing subnational indicators.

• Discussion of methodological challenges and results through an informal expert group – The project engages an informal expert group to discuss methodological challenges and current approaches for creating subnational CIP and PPP data.  

• Data compilation, harmonisation, and experimental analysis -- Existing subnational price data is compiled and harmonised where feasible. Alternative data sources and methodologies, including those from research institutions and private sector entities, are explored to produce experimental subnational price statistics.

• Methodology development and benchmarking -- A suitable methodology is developed and tested to estimate subnational CPIs and PPPs in selected pilot regions. Results are analysed, benchmarked against other economic indicators, and compiled into a database, with potential consideration for future public release. 

• An OECD report outlining the methodology for constructing subnational price indices and purchasing power parity proxies, including a summary of the stocktaking of available measures. The report also provides insights into subnational price differences, cost-of-living variations in selected OECD regions and economies, and their implications for developing subnational real income.

• A database of proxies for subnational price data for selected countries, including indicators of subnational price indices.