In order to meet the growing demand for official estimates of purchasing power parities (PPPs) at a sub-national level different countries have undertaken experiments in recent years. In some countries, the computation of sub-national PPPs is based on data taken directly from the CPI collected from retail outlets throughout the country while in other cases additional data are collected via a purpose-designed regional price levels survey for items of expenditure where suitable CPI data was not available (mainly clothing, furniture, electrical goods and travel).
Obviously, the estimates of regional price levels or changes are not a natural by-product of the CPI computation. However, although the CPI survey is not designed as an inter-area survey, it is possible to use its price observations and expenditure (or sampling) weights to obtain sub-national PPPs.
A working group comprised of Y. Dikhanov and Luiggi Biggeri analyzed this issue and presented findings to the Technical Advisory Group.