From a technical point of view, one of the most challenging undertakings in the ICP is building a list of specifications. In order to avoid cross country comparisons of prices of dissimilar products and products not truly representative of the countries, a more systematic and structured approach has been introduced in the 2005 round of the ICP. The new approach, Structured Product Description (SPD) was adopted from the US Bureau of Statistics checklist method.
The SPD approach uses a set of price-determining characteristics for each ultimate class of product, of which there are about 800 in the ICP for household consumption expenditure. These ultimate classes are defined by a more detailed version of the international Classification of Individual Consumption by Purpose (COICOP). The approach introduced a coding structure that consistently defines products across regions. For each item there is a specification describing the technical characteristics of the item in detail so it can be precisely identified. The specification also defines the other variables that need to be considered when pricing the item, such as terms of sales, accessories and installations costs. The database formed from these structured descriptions and the prices collected for them will permit more precise matching of items between countries. This will improve the quality of price comparisons between countries, both in comparing “like with like”, and in basing comparisons on a more characteristic array of product varieties for each country in the comparison. Several countries, including some with well developed statistical systems, have adopted the SPD approach in the design of their own consumer price data collection systems, and to harmonize their CPIs with other countries.