How do individual UK consumer prices behave?
AbstractThis paper examines the behaviour of individual consumer prices in the United Kingdom, and uncovers a number of stylised facts about pricing behaviour. First, on average 19% of prices change each month, although this falls to 15% if sales are excluded. Second, the probability of price changes is not constant over time. Third, goods prices change more frequently than services prices. Fourth, the distribution of price changes is wide, although a significant number of changes are relatively small and close to zero. Fifth, prices that change more frequently tend to do so by less. We find that conventional pricing theories struggle to match these results, particularly the marked heterogeneity, which argues against the use of ‘representative agent’ models.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Bank of England in its series Bank of England working papers with number 438.
Length: 40 pages
Date of creation: 31 Oct 2011
Date of revision:
Contact details of provider:
Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH
Phone: +44 (0)171 601 4030
Fax: +44 (0)171 601 5196
Web page: http://www.bankofengland.co.uk/
More information through EDIRC
Consumer prices; price-setting behaviour.;
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
- NEP-CBA-2011-11-07 (Central Banking)
- NEP-HME-2011-11-07 (Heterodox Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Boivin & Marc P. Giannoni & Ilian Mihov, 2009.
"Sticky Prices and Monetary Policy: Evidence from Disaggregated US Data,"
American Economic Review,
American Economic Association, vol. 99(1), pages 350-84, March.
- Boivin, Jean & Giannoni, Marc & Mihov, Ilian, 2007. "Sticky Prices and Monetary Policy: Evidence from Disaggregated US Data," CEPR Discussion Papers 6101, C.E.P.R. Discussion Papers.
- Jean Boivin & Marc Giannoni & Ilian Mihov, 2007. "Sticky Prices and Monetary Policy: Evidence from Disaggregated U.S. Data," NBER Working Papers 12824, National Bureau of Economic Research, Inc.
- Boivin, Jean & Giannoni, Marc P. & Mihov, Ilian, 2006. "Sticky prices and monetary policy: Evidence from disaggregated US data," CFS Working Paper Series 2007/14, Center for Financial Studies (CFS).
- Álvarez, Luis J. & Burriel, Pablo & Hernando, Ignacio, 2005.
"Do decreasing hazard functions for price changes make any sense?,"
Working Paper Series
0461, European Central Bank.
- Luis J. Álvarez & Pablo Burriel & Ignacio Hernando, 2005. "Do decreasing hazard functions for price changes make any sense?," Banco de Espaï¿½a Working Papers 0508, Banco de Espa�a.
- Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1415-1464, November.
- Hoffmann, Johannes & Kurz-Kim, Jeong-Ryeol, 2006.
"Consumer price adjustment under the microscope: Germany in a period of low inflation,"
Working Paper Series
0652, European Central Bank.
- Hoffmann, Johannes & Kurz-Kim, Jeong-Ryeol, 2006. "Consumer price adjustment under the microscope: Germany in a period of low inflation," Discussion Paper Series 1: Economic Studies 2006,16, Deutsche Bundesbank, Research Centre.
- Baumgartner, Josef & Glatzer, Ernst & Rumler, Fabio & Stiglbauer, Alfred, 2005.
"How frequently do consumer prices change in Austria? Evidence from micro CPI data,"
Working Paper Series
0523, European Central Bank.
- Glatzer, Ernst & Rumler, Fabio & Baumgartner, Josef & Stiglbauer, Alfred, 2005. "How Frequently Do Consumer Prices Change in Austria? Evidence from Micro CPI Data," Working Papers 101, Oesterreichische Nationalbank (Austrian Central Bank).
- Sheshinski, Eytan & Weiss, Yoram, 1977. "Inflation and Costs of Price Adjustment," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 287-303, June.
- Fabiani, Silvia & Druant, Martine & Hernando, Ignacio & Kwapil, Claudia & Landau, Bettina & Loupias, Claire & Martins, Fernando & Matha, Thomas & Sabbatini, Roberto & Stahl, Harald & Stokman, Ad, 2006.
"What Firms' Surveys Tell Us about Price-Setting Behavior in the Euro Area,"
808, University Library of Munich, Germany.
- Silvia Fabiani & Martine Druant & Ignacio Hernando & Claudia Kwapil & Bettina Landau & Claire Loupias & Fernando Martins & Thomas Mathä & Roberto Sabbatini & Harald Stahl & Ad Stokman, 2006. "What Firms' Surveys Tell Us about Price-Setting Behavior in the Euro Area," International Journal of Central Banking, International Journal of Central Banking, vol. 2(3), September.
- Felix Ritchie, 2008. "Secure access to confidential microdata: four years of the Virtual Microdata Laboratory," Economic and Labour Market Review, Palgrave Macmillan, vol. 2(5), pages 29-34, May.
- Philip Bunn & Colin Ellis, 2012.
"How do Individual UK Producer Prices Behave?,"
Royal Economic Society, vol. 122(558), pages F16-F34, 02.
- Emmanuel Dhyne & Luis J. Alvarez & Herve Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lunnemann & Fabio Rumler & Jouko Vilmunen, 2006. "Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 171-192, Spring.
- Lünnemann, Patrick & Mathä, Thomas Y., 2005.
"Consumer price behaviour in Luxembourg: evidence from micro CPI data,"
Working Paper Series
0541, European Central Bank.
- Patrick Lünnemann & Thomas Mathä, 2005. "Consumer price behaviour in Luxembourg: evidence from micro CPI data," BCL working papers 17, Central Bank of Luxembourg.
- Luc Aucremanne & Emmanuel Dhyne, 2004.
"How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI,"
Working Paper Research
44, National Bank of Belgium.
- Aucremanne, Luc & Dhyne, Emmanuel, 2004. "How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI," Working Paper Series 0331, European Central Bank.
- Mónica Dias & Daniel Dias & Pedro Duarte Neves, 2004.
"Stylised Features of Price Setting Behaviour in Portugal: 1992-2001,"
w200405, Banco de Portugal, Economics and Research Department.
- Dias, Mónica & Dias, Daniel & Neves, Pedro D., 2004. "Stylised features of price setting behaviour in Portugal: 1992-2001," Working Paper Series 0332, European Central Bank.
- Luis J. Álvarez & Ignacio Hernando, 2004.
"Price setting behaviour in Spain: stylised facts using consumer price micro data,"
Banco de Espaï¿½a Working Papers
0422, Banco de Espa�a.
- Álvarez, Luis J. & Hernando, Ignacio, 2004. "Price setting behaviour in Spain: stylised facts using consumer price micro data," Working Paper Series 0416, European Central Bank.
- Capie,Forrest, 2010. "The Bank of England," Cambridge Books, Cambridge University Press, number 9780521192828, December.
- Alessandro Flamini & Guido Ascari & Lorenza Rossi, 2012.
"Industrial Transformation, Heterogeneity in Price Stickiness, and the Great Moderation,"
DEM Working Papers Series
025, University of Pavia, Department of Economics and Management.
- Flamini, Alessandro & Ascari, Guido & Rossi, Lorenza, 2012. "Industrial Transformation, Heterogeneity in Price Stickiness, and the Great Moderation," Dynare Working Papers 24, CEPREMAP.
- Philip Bunn & Colin Ellis, 2012. "Examining The Behaviour Of Individual UK Consumer Prices," Economic Journal, Royal Economic Society, vol. 122(558), pages F35-F55, 02.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publications Team).
If references are entirely missing, you can add them using this form.