Definition: Implicit quality adjustment

Category: Consumer Price Index

Inferring indirectly the change in the quality of a product of which the characteristics change over time by estimating, or assuming, the pure price change that has occurred. For example, if the pure price change is assumed to be equal to the average for some other group of products, the implied change in quality is equal to the actual observed price change divided by the assumed pure price change. If the whole of the observed price change is assumed to be pure price change, there is assumed to be no change in quality. http://www.ilo.org/public/english/bureau/stat/guides/cpi/index.htm