Philippine Classification of Individual Consumption According to Purpose (PCOICOP)

Technical Notes

TECHNICAL NOTES

I. Introduction

The 2009 Philippine Classification of Individual Consumption According to Purpose (PCOICOP) is the first standard classification of individual consumption expenditures in the country.

The 2009 PCOICOP was patterned after the 1999 Classification of Individual Consumption According to Purpose (COICOP) developed by the United Nations Statistics Division (UNSD) and serves as one of the functional classification systems in the 1993 and 2008 System of National Accounts (SNA) recommended by the United Nations.

The 1999 COICOP identifies the individual consumption expenditures incurred by the three institutional sectors, namely: (a) households; (b) non-profit institutions serving households; and (c) government.  In the preparation of the 1999 COICOP, the OECD consulted regularly with the Statistical Office of the European Communities (Eurostat), the UNSD and the national statistical agencies of its Member countries.  The final version of COICOP which was prepared  by the OECD Statistics Directorate and by the UNSD was submitted to the United Nations Statistical Commission for approval at its thirtieth session  in March 1999.

II. Purposes and Uses of the PCOICOP

Among the uses of the 2009 PCOICOP are as follows: (a) serve as a framework for the aggregation and integration of the Household / Personal Consumption Expenditures in the SNA; (b) provide inputs in the formulation of basket of goods for the Consumer Price Index; (c) serve as a guide in the classification of goods and services for the Family Income and Expenditure Survey and Commodity Outlet Survey; and (d) serve as a tool in the analysis of individual consumption expenditures.

III. Criteria for Classifying Goods and Services

1. Purpose of consumption

The purpose of consumption includes, among others,  for nourishing the body (food), preventing or curing illness (health), acquiring knowledge (education) , traveling from one place to another (transport) , protection of the body against inclement weather (clothing and garments), etc.

2. Relevance

Relevance is the relative importance of the consumption expenditure in the economy. There is a need to identify the most relevant or significant consumption expenditures of households that should be highlighted or given a separate code in the PCOICOP.

3. Availability of goods and services consumed

The most commonly purchased items  or services availed by individual households in the country based on the FIES and Commodity Outlet Survey were also considered in the preparation of the 2009 PCOICOP in order to take into account the local situation.

IV. Structure and Hierarchy of Categories

The 2009 PCOICOP has five (5) levels of detail which are referred to as follows:

Division(2-digit level)
Group(3-digit level)
Class(4-digit level)
Sub-class(5-digit level)
Item(6-digit level)

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A maximum of nine (9) categories can be provided under each group, class, sub-class and expenditure item in the PCOICOP.

Breakdown by Divisions of the PCOICOP

Division 01 - Food and Non-Alcoholic Beverages
Division 02-Alcoholic Beverages
Division 03-Clothing and Footwear
Division 04-Housing, Water, Electricity, Gas and Other Fuels
Division 05-Furnishings, Household Equipment and Routine Household Maintenance
Division 06-Health
Division 07-Transport
Division 08-Communication
Division 09-Recreation and Culture
Division 10-Education
Division 11-Restaurants and Hotels
Division 12-Miscellaneous Goods and Services
Division 13-Individual consumption expenditure of Non-Profit Institutions Serving Househols (NPISHs)
(identifies those non-profit institution expenditures which are regarded as for individual consumption and classifies them by purpose, namely: health, education, social protection, recreation and culture and other services)
Division 14-Individual consumption expenditure of General Government
(identifies those government  expenditures which are regarded as for individual consumption and classifies them by purpose, namely: health, education, social protection, recreation and culture).

By institutional sector, the COICOP is categorized as follows:

Division 01 – 12 - Individual consumption expenditure of Households
Division 13-Individual consumption expenditure of  NPISHs
Division 14-Individual consumption expenditure of General Government

It is at the Class level or 4 – digit level that the types of expenditures are defined.

Classes are further divided into:

Services (S), e.g. hospital services, rental services, internet services, etc.
Non-durables (ND),e.g. food, gasoline, electricity, etc.
Semi-durables (SD),e.g. clothing, footwear,  small electrical appliances, etc.
Durables (D),e.g. car, furniture and furnishing, household appliances, etc.

Similar to the UN COICOP, the first 4 digits (class level) of PCOICOP reflects the expenditures almost common to all countries. On the other hand, the 2 last digits (fifth and sixth) reflect expenditures common to the Philippines or in local situation. This was done at the subclass and item levels, without sacrificing completeness of  class coverage as defined or specified in the UN COICOP.

Coding System
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The 2009 PCOICOP was developed by the NSCB in consultation with the data users and producers. This was compared with other existing standard classification systems on goods and services in the country and reviewed by the Technical Committee on Statistical Standards and Classifications (TC-SSC) through its Technical Working Group on Expenditure Classification (TWG EC) composed of experts from the Bangko Sentral ng Pilipinas (BSP),  Bureau of Agricultural Statistics (BAS), National Statistics Office (NSO), Department of Trade and Industry (DTI), Department of Energy (DOE), Department of Education (DepEd), Food and Nutrition Research Institute (FNRI), Bangko Sentral ng Pilipinas (BSP), Department of Health  (DOH) and National Statistical Coordination Board (NSCB).

The 2009  PCOICOP  was approved by the NSCB Executive Board on the 12th  day of May 2010 through NSCB Resolution No. 008, Series of 2010 entitled “Approving and Adopting the 2009 Philippine Classification of Individual Consumption According to Purpose”.

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