Consumer Price Index (December 2005 = 100) Methodological foundations

Transcription

1 Consumer Prce Index (December 25 = 1) Mehodologcal foundaons Neuchâel, 28

2 The Swss Sascs seres publshed by he Federal Sascal Offce (FSO) covers he followng felds: Sascal Base and Overvews 1 Populaon 2 Terrory and Envronmen 3 Employmen and Income from Employmen 4 Naonal Economy 5 Prces 6 Indusry and Servces 7 Agrculure and Foresry 8 Energy 9 Consrucon and Housng 1 Toursm 11 Mobly and Transpor 12 Money, Banks, Insurance Companes 13 Socal Secury 14 Healh 15 Educaon and Scence 16 Meda, Informaon Socey, Spor 17 Polcs 18 Publc Admnsraon and Fnance 19 Crme and Crmnal Jusce 2 Economc and socal Suaon of he Populaon 21 Susanable Developmen, regonal and nernaonal Dspares

3 Swss Sascs Consumer Prce Index (December 25 = 1) Mehodologcal foundaons Compled by Publshed by Cornne Becker Vermeulen Federal Sascal Offce Offce fédéral de la sasque (OFS) Neuchâel, 28

4 IMpressum Publshed by: Informaon: Auhors: Obanable from: Federal Sascal Offce (FSO) Prces, e-mal: Cornne Becker Vermeulen Order number: Prce: Seres: Domane: Orgnal ex: Translaon: Fronspece: Graphcs/Layou: Federal Sascal Offce (FSO), CH-21 Neuchâel Phone: +41 () / fax +41 () / e-mal: order@bfs.admn.ch CHF 9 (VAT no ncl.), prn on demand Swss Sascs 5 Prces French FSO Translaon Servce roland Hrer, Berne FSO Copyrgh: FSO, Neuchâel 28 reproducon wh menon of source auhorzed (excep for commercal purposes) ISBN:

5 Conens Conens 1 Inroducon 5 7 The qualy managemen sysem 28 2 Successve revsons of he CPI 6 8 Publcaons 29 3 The CPI An negral par of he Swss, European and nernaonal sascal sysem 7 4 Mehodologcal foundaon Scope of applcaon Baske of goods and servces and weghng Prces Calculaon mehod 16 5 A closer look a some specfc ndces Ren Index 5.2 The arff survey: he examples of gas and denal servces The ar fare survey The nsurance survey 23 6 The modular ndex sysem The cos of lvng ndex Soco-economc consumer prce ndces The harmonzed ndex of consumer prces Concluson 27 Fgures and graphcs Fg. 1: Herarchcal srucure of he baske of goods and servces and example 9 Fg. 2: From ICS daa o crcal expendure for he CPI 1 Fg. 3: From ICS expenses o CPI baske weghs 11 Fg. 4: Prce-movemen adjusmen 11 Fg. 5: The eleven regons of he 25 ICS survey and her respecve weghs 13 Fg. 6: The hree levels of CPI aggregaon 16 Fg. 7: Housng marx 2 Fg. 8: Ar-fare survey: ls of producs 22 Fg. 9: Dfferences beween he CPI and he cos of lvng ndex 24 Fg. 1: Comparson of he Swss CPI wh he HICP 27 Fg. 11: The modular ndex sysem 27 Graph 1: Movemen of consumer prce ndces for dfferen populaon groups 26 Annexes Annex 1: Baske of goods and servces and weghng 26 Annex 2: CPI press release (exrac) Annex 3: Frequences of survey Annex 4: Survey of naural gas prces (form) Annex 5: Survey of denal servces (form) Annex 6: Car nsurance survey (form) Annex 7: Survey of home and conens nsurance (form) Annex 8: FSO press release: Healh-nsurance premum ndex 26 (German and French) Annex 9: FSO opc: Soco-economc consumer prce ndces (German and French) 28 fso Consumer Prce Index 3

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7 nroducon 1 Inroducon The Consumer Prce Index (CPI) measures he varaon n consumer purchasng power, answerng he queson of how much he prces of goods and servces purchased by prvae households has changed snce he prevous monh, he prevous year or any oher reference perod. Known more commonly as he prce nflaon or nflaon rae, s one of he mos mporan economc ndcaors and one ha s wdely consuled by economc and polcal crcles, as well as by he general publc. I serves a varey of purposes: adjusmen of wages, pensons, arffs and rens; bass for decsons abou economc polcy (for nsance, abou he Swss Naonal Bank s moneary polcy); observaon of prce movemens for analyss and forecasng purposes; comparson wh oher counres; Ths publcaon summarzes he basc elemens used n calculang he CPI and s nended for s man users, hose conducng sascal and economc research and he general publc. I conans answers o several frequenly asked general quesons, such as: wha does he so called «baske of goods and servces» conan and how s deermned? Wha sources are used o calculae he weghs of ha baske? How and by whom are prces colleced? How are changes n produc qualy handled? Wha calculaon formulae are used o aggregae he varous prce movemens? Why are changes n mandaory healh-nsurance premums no aken no accoun n prce ndex calculaons? Is he CPI a cos of lvng ndex? Is euro compable? Readers wh even more quesons can fnd dealed nformaon abou he prce collecon for parcular producs such as housng, gas, denal servces, ar fares and nsurances, and numerous llusrave examples are also provded. calculaon of he change n real erms of varous nomnal values, such as wages, urnover or Naonal Accouns ems. 28 fso Consumer Prce Index 5

8 CPI Revsons 2 CPI Revsons The CPI was frs calculaed n 1922 and has snce undergone egh revsons, n 1926, 195, 1966, 1977, 1982, 1993, 2 and 25. Perodc revsons are necessary o ncorporae he laes naonal and nernaonal research fndngs n order o updae he Index s mehodologcal and concepual foundaon, adjus he conen of he baske of goods and servces and s weghngs o reflec changes n marke srucures and he consumpon habs of households, as well as o ake accoun of new user needs. Research s parcularly acve n he area of prce sascs, especally because of he CPI s mporance for he economy. Among oher hngs, he las wo revsons mproved qualy adjusmen echnques, nroduced new calculaon formulae and pu n place a new prce collecon sysem. Naonal and nernaonal cooperaon makes possble no only o pool experence and new fndngs bu also o sandardze pracce. Updang marke srucures and akng regular accoun of changes n supply and demand are essenal for ensurng ha resuls appropraely reflec marke reales. If he 1966 consumer srucure had been reaned, food producs would have had a weghng of over 3% whereas nowadays, hey represen only 11% of household consumpon expendure (26 weghng). If he baske of goods and servces had no been adjused wh every revson, movemens n he prce of compuers, moble phones and oher echnologcal nnovaons would no be measured and ncluded n he nflaon rae. Users needs also change over he years, becomng more dversfed and requrng more argeed nformaon because of he growng complexy of he economc sys- em. Consequenly, a modular ndex sysem comprsng he CPI as s cenral module and complemenary modules was pu n place n 2. The laer supply nformaon whch he CPI does no provde, such as he movemen of healh-nsurance premums and her mpac on he dsposable ncome of households (healh-nsurance premum ndex) or he prce ncrease for varous socoeconomc groups (pensoners, sngle parens, couples wh chldren, people n employmen and he selfemployed). Revsons hus provde an opporuny for soundng ou user needs so as o beer respond o her expecaons. A revson also provdes an opporuny for furher opmzng he cos-benef rao and for reducng producon coss hrough approprae samplng and survey echnques. Ths was an mporan aspec n he 25 revson. The curren conex of budge consrans made essenal o reflec on how o cu sascal producon coss whle mananng or even mprovng nformaon qualy. In parallel wh he above facors, he 25 revson had furher objecves: nroducng a projec qualy managemen sysem, developng a new IT plaform and reducng he workload of our daa supplers wh approprae collecon echnques. 6 Consumer Prce Index fso 28

9 The CPI an negral par of he Swss, European and nernaonal sascal sysem 3 The CPI an negral par of he Swss, European and nernaonal sascal sysem Consrucon of he CPI s condoned by several facors: The CPI s a componen n he Swss sascal sysem whose overall framework s defned by he Naonal Accouns (NA). CPI conceps, defnons and demarcaons mus as far as possble correspond o hose of he Naonal Accouns. Thus, s he laer whch defnes he concep of prvae household consumpon expendure. A European level, EUROSTAT s rules and drecves for calculang harmonzed ndces of consumer prces (HICPs) were aken no accoun n he 2 and 25 revsons, even hough hey dd no become mandaory unl 1 January A nernaonal level, Swzerland rafed Inernaonal Labour Organzaon (ILO) Convenon No. 16, hus underakng o comply wh s sandards for esablshng labour sascs of whch he CPI s par. All hese framework condons herefore have a sgnfcan nfluence on he CPI s concepual foundaon and also make possble o guaranee coherence of he varous sascs hroughou Swzerland and her nernaonal comparably. 1 A presen, Swzerland does no calculae a HICP. Ths ndcaor wll be produced under he head of he blaeral agreemens concluded wh he European Unon, wh effec from January fso Consumer Prce Index 7

10 Mehodologcal foundaons 4 Mehodologcal foundaons As s he case for many economc sascs, CPI consrucon s no easy, gven he complexy of he economc and commercal fabrc and he fac ha s consanly changng. A whole se of parameers herefore have o be defned n order o asceran wha s o be measured and how can be measured. Ths chaper explans he varous sages necessary for CPI consrucon and s key consuen elemens. 4.1 Scope of applcaon In order o be able o nerpre and use he CPI correcly, s scope has o be defned. Wha par of he populaon s covered? Wha ypes of expendure are consdered and over wha geographcal area? On whch errory are prces colleced? Populaon coverage ncludes prvae households ha are permanenly resden n Swzerland. Consequenly, ourss, cross-border workers and households resdng n Swzerland n he shor erm (foregn sudens, emporary workers, ec.) are excluded. Collecve households, such as resdens n homes for he elderly or n suden hosels are no par of he populaon covered eher, as lle nformaon s avalable abou her expendure. The goods and servces consdered are demarcaed by fnal consumpon expendure. Accordng o he Naonal Accouns defnon, he followng are no regarded as consumpon: ransfer paymens 2 such as drec axes, socal secury conrbuons, as well as expendure on nvesmens and savngs. Moreover, he CPI s confned o moneary ransacons so excludes self subssence, barer and servces n knd. 2 A ransfer paymen s an oblgaory expendure for households. Such paymens are managed by he Sae or by prvae non-prof-makng nsuons. The expendure consdered s ha made by he populaon covered n Swzerland and abroad (naonal concep for expendure). Lasly, prces are colleced on Swss errory (domesc concep for prces). 4.2 The baske of goods and servces and s weghng The frs componen needed o produce he CPI s he creaon of he baske of goods and servces and he allocaon of a wegh o each of s elemens The baske of goods and servces Ths s a marke baske groupng coverng he man goods and servces consumed by households. All sors of producs are represened: food producs, clohng, expendure on housng, furnure and healh servces, no forgeng expendure on ranspor, communcaon producs, ec. The dealed 26 baske s gven n Annex 1. Two quesons arse when pung ogeher a baske of goods and servces: wha s s conen and wha s s srucure? The baske mus be represenave of all household consumpon expendure. Is conen mus be as exhausve as possble hough canno survey all goods and servces on he marke, because he number of producs avalable o consumers s much oo hgh. Choces herefore have o be made, largely on he bass of he mporance of he producs n household consumpon expendure: producs accounng for less han.1% (hs corresponds o an average expendure of CHF 5. per monh and household) are generally no ncluded n he baske of goods and servces (for nsance, he renng of consumer durables, drvng lessons and underaker servces). An excepon s made n he case of some saples, such as rce, flour, ea, and 8 Consumer Prce Index fso 28

11 METHODOLOGICAL foundaons ceran frus and vegeables whch, despe her slgh mporance for household expendure, are neverheless par of he baske of goods and servces. The source used o consruc he baske s derved from he Income and Consumpon Survey whch can provde hghly dealed nformaon abou he expendures of prvae households and her mporance, and from assocaons, dsrbuors and marke research companes wh experence n he varous markes concerned 3. Once he producs are chosen, a srucure has o be defned. Ths s mporan n order o classfy he producs as coherenly as possble and o provde aggregaed resuls whch mach user needs. The Classfcaon of Indvdual Consumpon by Purpose (COICOP 4 ) has been used snce 2 o calculae nflaon and for oher surveys by all European counres and allows nernaonal comparson of he dealed resuls for he welve man groups and jonly defned produc groups. The welve man groups are as follows: 1. Food and non-alcoholc beverages 2. Alcoholc beverages, obacco 3. Clohng and foowear 4. Housng, waer, elecrcy, gas and oher fuels 5. Furnshngs, household equpmen and roune manenance of he house 6. Medcal servces and expendure on healh 7. Transpor 8. Communcaons 9. Recreaon and culure 1. Educaon 11. Resaurans and hoels 12. Mscellaneous goods and servces Fg. 1: A a more refned level, he Classfcaon feaures expendure ems and varees. These wo levels are consued a naonal level n lne wh each counry s own consumpon srucure. The baske s flexble n ha s componens can be regrouped accordng o dfferen crera, dependng on user needs. Resuls are also publshed: accordng o he ype of goods (merchandse or servces) accordng o he orgn of he goods (naonal or foregn) for groups of producs ha share ceran characerscs (for nsance, ol producs, seasonal producs, admnsered prces) excludng ceran goods (for nsance, he CPI whou seasonal producs, obacco producs or admnsered prces). An excerp from a press release conanng all he resuls publshed s gven n Annex 2 (only n French and German) Weghng Herarchcal srucure of he baske of goods and servces and example Type of em Man group Produc group Produc group Expendure em Varey Varey Example Food and non-alcoholc beverages Food Bread and cereals Flour Whe flour Oher flours No all he componens of he baske of goods and servces are equally mporan for household budges. For example, households do no spend he same amoun on housng (2%) as on clohng (4.3%). To acheve economcally correc resuls, he varous prce movemens recorded mus be weghed by he mporance of he correspondng expendure ems 5. The dealed weghng for 26 s gven n Annex 1. 3 Swzerland has many assocaons represenng varous secors. Thus, for nsance, n order o consruc he sandard fru and vegeable baske, he FSO consuled he Fru-Unon Susse and he Unon maraîchère susse. 4 Classfcaon of Indvdual COnsumpon by Purpose (COICOP), EUROSTAT, Compendum of HICP reference documens (2/21/B/5), 21, page 281 Commsson Regulaon (CE) No. 1749/1999 of 23 July For nsance, f rens ncrease by 2% and are weghed a 2%, rens conrbue.4% o he prce ncrease. 28 fso Consumer Prce Index 9

12 Mehodologcal foundaons The weghng s derved from he Income and Consumpon Survey (ICS) conduced annually by he FSO among households permanenly resden n Swzerland 6. The ICS s conduced usng he welve samples aken a random from he elecronc elephone drecory and srafed accordng o Swzerland s seven major regons (see Fg. 5 on page 1). The households chosen a random are surveyed for one monh abou her daly, recurrng and non-recurrng consumpon expendure and her ncome. Every day, hey fll ou several dares n whch hey accuraely record her expendure and ncome. These daa are hen mned, plausblzed and analyzed before beng used as he bass for weghng he baske. The ICS s currenly he bes nformaon source for calculang he wegh of he baske because : covers all he consumpon expendure of prvae households; provdes very up-o-dae resuls (me-lag of jus wo years: he 26 weghs were calculaed usng he 24 ICS resuls); uses he same classfcaon as he CPI (he COICOP see Chaper 4.2.1); provdes nformaon abou daa precson (varance); can ake accoun of specal CPI requremens. The sole drawback s he sze of he sample and more specfcally he degree of accuracy of he resuls for ceran durable goods. For groups of goods whch are purchased nfrequenly (for nsance vehcles, household applances), he number of enres regsered among households s generally low and he varance hgh, producng annual weghs ha flucuae consderably for hese groups of goods. The eam responsble for he ICS has concenraed s work on hs area n recen years. To mprove he accuracy of he resuls, he survey perod for hese durable goods was ncreased from one o 12 monhs, whch means ha households are ncluded n he survey no jus durng he monh for whch hey have been seleced bu also durng he prevous eleven monhs. Ths produces more observaons and less varance. However, he ICS as sands canno be used for calculang he wegh of he baske of goods and servces. A ceran number of operaons are called for, and he converson of ICS daa o he fnal weghs for he baske s se ou n fgure 2: Fg. 2: Sage 1: From ICS daa o crcal expendure for he CPI Resuls of he Income and Consumer Survey (ICS): expendure of prvae households n CHF and dsrbuon n % H Analyss of change compared wh las survey: - analyss and explanaon of dfferences - checkng of resuls - correcon, as necessary Refnemen of ICS: - elmnaon of expendure ha does no come whn he scope of he CPI: ransfer paymens, expendure on nvesmen and savngs, non-moneary ransacons such as goods produced for own consumpon and servces n knd - subracon of rembursemens for heang and from vehcle sales - addng of he «servce provson" componen of nsurances (premums pad mnus rembursemens receved) H Consumpon expendure accordng o he ICS whch s crcal for he CPI. H In a frs sep, ceran ems of expendure have o be elmnaed as hey are no covered by he CPI. Wha s mporan durng hs frs sage s o oban consumpon expendure whch s crcal for he CPI. 6 By defnon, hs excludes ourss and households resdng n Swzerland for a shor perod 1 Consumer Prce Index fso 28

13 Mehodologcal foundaons Fg. 3: Sage 2: From ICS expenses o CPI baske of goods and servces weghs Consumpon expendure accordng o he ICS whch s a crcal for he CPI. Oher sources of nformaon for he dsrbuon of ceran expendure no provded by he CPI: survey-conducng nsues, assocaons, oher federal sascs To oban he fnal CPI weghs used durng a year, a prce-updae s made beween he year n whch he ICS was conduced (-2) and he CPI reference perod (December -1). Accordng o he ndex heory and he mehodology used by he FSO 8, he base perod (CPI=1) and he reference perod (perod for whch he weghs are vald) should concde. ICS weghs are adjused as follows: H H Calculaon of CPI weghng per expendure em Fg. 4: Prce-movemen adjusmen ERC -2 CPI wegh Dec. -1 H Prce updang beween he ICS year and he CPI reference perod Expendure -2 Prce updang Expendure Dec. -1 H Calculaon of he fnal baske weghs H Analyss and plausblzaon of he fnal weghs compared wh he prevous weghng Fnal baske weghs The ICS s he man source used for calculang he weghs. For ceran groups of goods, he resuls provded are no however suffcenly dealed, makng necessary o resor o oher nformaon sources n order o effec dsrbuon. A ypcal example s he weghng of energy: he ICS does no provde dealed nformaon abou households energy expendure on elecrcy, gas, heang ol, remoe heang and wood. Ths s because much of hs expendure s par of he all-n renal coss blled by he landlord. So households ofen do no know wha hey acually spend on heang. Federal Offce of Energy 7 sascs are used o dsrbue hs energy expendure over he varous baske ems as hey provde dealed nformaon abou households fnal consumpon of energy, hus makng possble o calculae a dsrbuon key. 7 Overall Energy Sascs for Swzerland, Federal Offce of Energy, annual publcaon. H Prce -2 X volume -2 x Prce Dec. -1 Prce -2 = R Prce Dec. -1 X volume -2 For nsance, o calculae he December 25 weghs, he 24 ICS resuls were adjused o he prce movemen regsered beween 24 (average) and December Ths mehod s frequenly used a nernaonal level because s smple o apply, ransparen and nellgble. However, pus forward he hypohess of prce nelascy among producs: accordng o hs mehod, f prces for a produc double, household expendure on hs same produc doubles oo. Whle hs may be rue for ceran nelasc and slghly elasc goods, such as fuel or energy vecors, hardly apples o mos oher goods. Accordng o he sudes conduced n he conex of he 25 CPI revson, hs drawback does no mpac much on he resuls, a leas no a he level of oal nflaon 1, whch s why hs mehod s beng reaned unl 21 n any even. 8 In he nal Laspeyres concep, he base perod and he reference perod mus be dencal. A presen, some counres no longer apply hs prncple so have dfferen base and reference perods. The FSO wll rean hs prncple unl In acual fac, Ocober 25 was used for quesons of calculaon perods. However, prce movemens beween Ocober and December are closely monored o check here s no bas. 1 The 22 and 23 ndces were recalculaed ex-pos usng he acual weghs,.e. wh he resuls of he 21 and 22 ICS. Alhough he weghs vary consderably n ceran groups, he smulaed nflaon rae s dencal o he offcal nflaon rae. 28 fso Consumer Prce Index 11

14 Mehodologcal foundaons As he ICS s conduced annually, he baske weghs have been updaed every year snce 22, makng possble o ake fas accoun of changes n household consumpon habs and o have weghs ha more closely reflec he acual consumpon suaon of prvae households. 4.3 Prces The second facor requred n order o calculae he CPI s prces, around whch a whole seres of quesons revolves: Whch prces? Should dscouns, specal offers, sales and oher promoonal acves be aken no accoun? How should arffs be deal wh? When should prces be ncluded n he calculaon? A he me of purchase, paymen or use? In whch regons and a whch sales oules should prces be colleced? How frequenly and a wha me of he monh should prces be colleced? Who collecs he prces? Wha echnque s used? How should changes n produc ranges and qualy adjusmens be handled? Prces are he bass for calculang he CPI and ulmaely, he qualy of he resuls depends on he qualy of he prces The crcal prces The ransacon prce.e. he purchase prce pad by he consumer for specfc goods or servces s crcal for calculang he CPI. Ths prce herefore ncludes ndrec axes (VAT, ncenve ax) and subsdes. In conras, all cred or neres charges are excluded. Prce reducons (specal offers, promoons, dscouns, sales) are aken no accoun subjec o he followng condons: he reducon mus apply o a precsely defned good or servce whch s par of he CPI produc sample and s dencal on all couns wh ha n he prevous perod; mus be on offer o all consumers, whou dscrmnaon and no be subjec o any condons; dscouns for bulk purchases mus no exceed hree mes he quany sold durng normal perods (for nsance, hree boles of shampoo for he prce of wo). The followng are herefore excluded: closng-down sale prces, prce reducons lnked o an oblgaon o purchase (for nsance, buy one book and ge he second half prce), prce reducons for ceran populaon groups (pensoners, hose on mlary servce, sudens, ec.) 11, as well as arcles whch are dscouned because hey are defecve or pas her sell-by dae. Tarffs are «specal prces» n he sense ha here s no jus one prce for a produc bu several, and ha hs se of «prces» s lnked o condons. Tarffs are found for elecrcy, gas and elephone consumpon as well as for publc ranspor. The problem wh hs ype of produc s ha he arff srucure alers over me, makng dffcul o follow s movemens (for nsance, he prce of a «shor rp» bus cke says he same bu he dsance ha can be ravelled for hs fare s reduced, or he fare sages are changed). To deal wh hs specfc characersc, servce packages correspondng o consumer models are defned. The cos of hese packages s aken o be a prce and s measured over me. An example of how prce movemens are calculaed wh arff-based producs s gven n Chaper Tmng of prce nroducon Prces are nroduced no he calculaon when he producs are purchased, hus applyng he acquson concep. Mos goods are bough, pad for and consumed vrually smulaneously or n any even durng he curren monh. For hese, no specal problems need o be addressed. On he oher hand, n oher cases, he dae of purchase may dffer consderably from he dae of paymen and use, especally for servces such as package holdays and ar ravel. The rp or flgh may be booked n February (dae of acquson), pad n May (dae of paymen) and consumed n July (dae of use). For such servces oo, he dae of acquson s wha couns: hus, he prces are vald for he monh of purchase. Ths concep has crucal praccal mplcaons. To be able o apply, he servce has o be defned exremely precsely. The ar ranspor prce survey s presened n Chaper Wh he excepon of ceran servces for whch prce reducons for specfc populaon groups can be consdered, such as cnema admssons or publc ranspor. 12 Consumer Prce Index fso 28

15 Mehodologcal foundaons Srucurng and samplng: choce of regons, sales oules and producs The prce survey s srucured n hree levels: regons, sales oules and producs. A sample represenave of he oal populaon s consruced a each level. As here s no relable survey plaform for random samplng, he purposve mehod s used. Regons were chosen accordng o he followng crera: as a bass for hs work, Swzerland s subdvded no seven major regons: one o hree regons are chosen from among hese major regons, wh a maxmum of one regon per canon; only large and medum-szed urban cenres, ncludng her conurbaons are aken no consderaon because consumpon s concenraed n hese cenres; In he end, eleven regons were seleced for prce collecon from 26 o 21. Each regon s weghed on he bass of he ICS consumpon expendure of prvae households 12 (same source as for weghng of he baske of goods and servces). Sales oules offerng producs found n he baske of goods and servces are seleced n each regon. The Index conans boh major sales oules esablshed naonwde and regonal sales oules, whch are chosen by regonal prce collecors. In all, approxmaely 2,2 sales oules parcpae n he successve surveys. Mos of he busnesses are grouped n dsrbuon channels 13, whch are n urn weghed accordng o he consumer expendure of prvae households. The sales oule sample s permanenly updaed, n lne wh oule marke developmen. care s aken o oban approprae geographcal dsrbuon coverng all language regons. Fg. 5: The eleven regons of he 25 ICS survey and her respecve weghs The eleven regons of he 25 ICS survey and her respecve weghs Basel 14,7 Norhwesern Swzerland Zurch 2,6 Zurch S.Gallen 1,3 Tcno Lugano 4,3 Major regon Prce collecon regon Wegh n % Neuchâel 6,2 Bern 14,8 Lucerne 8,6 Lausanne 9,9 Espace Melland Cenral Swzerland Easern Swzerland Chur 2,3 Geneva 5, Son 3,3 Lake Geneva Regon Tcno Lugano 4,3 FSO, ThemaKar, Neuchâel The wegh of he regons s adjused every fve years,.e. every me here s a revson. To guaranee represenavy of he resuls for a farly long perod and for smaller regons, he average of he 2 24 ICS daa was appled. 13 Among ohers, Mgros, Coop, dscoun realers, hypermarkes, specalzed shops and mal-order companes are sngled ou. 28 fso Consumer Prce Index 13

16 Mehodologcal foundaons In each of he sales oules seleced producs are chosen (also on a purposve bass) whose prce movemens are ncluded n he CPI calculaon. These producs are defned by he varees ha make up he baske of goods and servces and are chosen by regonal prce collecors and by he FSO. They mus be wdely sold and reman on shop shelves for a comparavely long perod o allow changes n her prces o be monored over he monhs. Some 4 prces n all are colleced every year Collecon frequency and coverage over me Prce collecon frequency s monhly for producs whose prces flucuae frequenly (fresh producs; for ol producs, prces are even colleced wce monhly), and quarerly or half-yearly for oher baske goods and servces. The prces of ceran producs whose movemens are known n advance and wdely publczed, such as elecommuncaon servces and publc ranspor, are even colleced aperodcally. Annex 3 conans he dealed prce-collecon frequences for each group of producs. Whn he framework of hese frequences, he prces of he chosen arcles are colleced durng he frs sx workng days of he monh, wh he excepon of ol producs. Snce December 25, heang ol and fuel prces have been colleced wce a monh nsead of once (on a se day a he begnnng and he mddle of he monh) because of her hgh volaly. Ths exenson of coverage over me for ol producs helps o make he resuls even more accurae. As par of producng a harmonzed ndex of consumer prces (HICP), collecon frequences and coverage over me wll be adaped o EUROSTAT rules and wll probably be alered from 28 (see Chaper 6.3) Prce-collecon organzaon and echnques collecors lve n he regon hey survey so are famlar wh s commercal srucure and local consumer habs. Ther work s regularly monored by IHA-GfK and by he FSO, and hey are gven ranng wce a year whch makes possble o consanly upgrade he qualy of her work and o sandardze collecon pracces (especally as regards qualy adjusmens). Cenral collecon s carred ou by he FSO. I concerns groups of producs whose prces are admnsered or sem-admnsered (for nsance, healh and publc ranspor), producs whose prces are dencal hroughou Swzerland (such as elecommuncaons) and major dsrbuon chans whose prces are se a naonal level. The FSO collecs prces n more han 1 sales oules. Three quarers of he prces are colleced n he feld (regonal prce collecors and FSO) and he remanng quarer by elephone, fax, hrough he pos, by e-mal, on he Inerne or n caalogues. The wde range of dfferen prce-collecon echnques can be explaned by he dversy of he markes: he deal collecon echnque s sough for each ype of produc,.e. he echnque whch makes possble o oban hgh-qualy daa a lower cos and o mnmze he workload of daa provders as far as possble. Consequenly, for he grea majory of prces, presence n he feld s absoluely necessary for obanng qualy daa. In conras, n oher felds (such as elecommuncaons), an Inerne survey suffces. New survey echnques have been under sudy snce 24, n parcular he use of scanner daa avalable n mos major real dsrbuon chans. These have he advanage of provdng accurae nformaon abou he producs ha sell bes and of exendng coverage of prces over me 14. They also help o keep down he workload of our daa provders. Prce collecon s dvded no wo caegores: Regonal collecon s conduced n he 11 regons. I concerns only par of he baske of goods and servces, namely producs whose prces are se a regonal level, such as fresh producs and ol producs for nsance. Ths regonal collecon also guaranees he presence n he sample of regonal sales oules such as bakers, buchers and specalzed shops. Snce 2, collecon work has been conraced ou o IHA-GfK, a prvae survey nsue, whch has a nework of 33 regonal prce collecors (3 per regon) who collec prces n jus under 1 sales oules. These regonal 14 Wh scanner daa, all ransacons effeced n he course of he monh are recorded. Ths means ha he (average) prce obaned s much more represenave han a prce whch s colleced jus once durng he frs week of he monh. 14 Consumer Prce Index fso 28

17 Mehodologcal foundaons Handlng of changes n qualy For calculang he CPI, heory requres composon of he baske of goods and servces o reman he same for a ceran perod so as o measure only prce movemens proper. However, n realy, producs change over me mprovng, followng fashon rends and echnologcal advances. For nsance, s dffcul o monor he prce of a compuer for longer han hree monhs. Smlarly, clohng generally has a lfe of jus one season. Under hese condons, s essenal o esablsh rules for produc subsuon and for makng qualy adjusmens. Once a produc s no longer par of a sales oule s range, here are four echnques whch can be used o replace : 1. Drec subsuon: hs nvolves fndng a smlar produc (produc B) wh characerscs smlar o hose of he one whch has dsappeared (produc A). The prce dfference beween hese wo producs s regarded as he whole prce dfference: Prce May 6 R Prce June 6 Dfference n qualy Dfference n prce Produc A 1. Produc B The chan mehod: hs echnque s manly appled o echnologcal producs and nvolves fndng a subsue produc (produc B) whch s no fundamenally dfferen from he produc whch has dsappeared (produc A) bu whch has sgnfcan qualave dfferences. To apply hs echnque, he produc whch has dsappeared and he subsue produc mus be n he produc range a he same me,.e. a -1or. The prce dfference measured beween he wo producs durng he same perod s regarded as a qualave dfference: Prce May 6 R Prce June 6 Dfference n qualy Dfference n prce Produc A 12. Produc B Non-subsuon: fnally, f none of he above hree mehods s applcable, he se of prces for he produc whch has dsappeared (produc A) s dsconnued and a new prce se s launched wh he new produc (produc B). No prce comparson s made. Prce May 6 Prce June 6 Dfference n qualy Dfference n prce Produc A 35. Produc B 4. Produc subsuon and qualy adjusmens are one of he mos problemac areas of prce sascs because s very dffcul o judge he dfference n qualy beween wo producs n erms of uly. One of he hypoheses developed n recen years s ha he uly derved from a commody s deermned by s consuen characerscs. These are hedonc echnques nvolvng he consrucon of a regresson model n whch a coeffcen s assgned o he produc s man characerscs. A model of hs knd allows calculaon of a (fcous) prce a whch he produc should be sold on he bass of s consuen elemens. The dfference beween he prce esmaed n hs way and ha acually observed on he marke s a whole prce dfference. The FSO does no apply hedonc echnques because hey are very expensve o develop bu s cooperang on a naonal projec and keeps a close eye on nernaonal developmens. Prce Aprl 6 Prce May 6 Prce June 6 Dfference n qualy Dfference n prce R Produc A Produc B Explc adjusmen: hs mehod s manly appled o personal compuers and vehcles. The dfference n qualy beween he produc whch has dsappeared (produc A) and he subsue produc (produc B) s evaluaed by an exper on he bass of he produc characerscs or on he bass of he opon coss: 28 fso Consumer Prce Index 15

18 Mehodologcal foundaons 4.4 The calculaon mehod n n p MG From basc aggregaon o upper-level 1 p aggregaon où: where: 1 The hrd and fnal componen needed for calculang n n p1 = he number of prce observaons n he CPI s he calculaon mehod whch ulmaely MG n n1 = makes possble o aggregae he daa and calculae he 1 p nombre d observaons de prx he prce of commody durng he monh n MG n p 1 = prx du ben pendan le mos sous under revew MG resuls. où: 1 revue p = he prx prce du ben of commody pendan le mos durng de he Once prces have been colleced, we have a se of basemonh où: prces. How are he ndces arrved a and how où: are n hey = nombre d observaons de prx aggregaed? Before answerng hs queson, n s mporan o recall ha he prces are aached o hree revue = p = = nombre The prx geomerc d observaons du ben mean pendan de s grealy prx le mos valued sous n prce sascs n prx nombre because du ben d observaons has pendan neresng le de mos prx mahemacal sous properes, such weghed levels: regons, dsrbuon channels p = and p he = revue prx du prx ben du ben pendan pendan le mos le mos sous de as ransvy base baske of goods and servces, as llusraed n Fg. 6. = prx revue du 15, whch s very mporan n he chan ben pendan mos de p = base prx concep du ben (see pendan upper-level le mos aggregaon de below). Moreover, These hree levels also affec he aggregaon phases. base he resuls provdes ake accoun of an elascy subsuon equal o 1 of ndvdual ems nsde he cell whch s more realsc economcally speakng han he nelascy ranslaed by he Carl arhmec mean 16 Fg. 6: The hree levels of CPI aggregaon. [ ] Expendure em 2 Expendure em n Expendure em 1 Dsrbuon channel Regon I II III IV Toal A Overall ndex B C D [ ] Toal 1 The cells conan observaons of non-weghed prces aached o a regon, dsrbuon channel and expendure em (for nsance, he prce of flour colleced n Neuchâel n specalzed shops). The frs sep n aggregaon he basc aggregaon consss of aggregang all hese prces wh he am of obanng one ndex per cell. The geomerc mean (GM) s used for hs purpose: 15 The ransvy axom requres ha an ndex beween T and Tn can be calculaed by passng hrough he nermedae seps Tn-1, Tn-2, Tn The Carl arhmec mean or he mean of prce relaves (MPR) consss of calculang an ndex for each se of prces and aggregang hese ndces arhmecally: n 1 p MRP n 1 p Ths mehod assgns he same mporance o each prce varaon. 16 Consumer Prce Index fso 28

19 Mehodologcal foundaons x, z g l g k I, lk l, xk, z 1 g l g k I, lk l, k 1 x, z I g l g k x, z l, k 1 I g l g k I l, k 1 The second sage n aggregaon nermedae aggregaon comprses aggregaon of he ndces obaned durng basc aggregaon. Regons and hen dsrbuon channels are aggregaed usng a weghed arhmec mean, hus obanng an ndex for each expendure em (for nsance, he ndex for he prce of flour): where: x, z I g l g l, k 1 = he ndex of expendure em a he monh under revew = he ndex of expendure em a me by dsrbuon channel l and regon k = Ihe, lk weghng assgned o dsrbuon channel l (l=1,,x) =, he weghng assgned o regon k (k=1,,z) n lk k I, lk I 1 g I The hrd and fnal aggregaon phase upper-level aggregaon enables calculaon of he CPI a he oal level. The ndex for each expendure em, obaned durng he second phase of aggregaon, s weghed by he laer s respecve wegh n he baske of goods and servces (for nsance, he prce ndex for flour s weghed by he wegh of flour n he baske). Aggregaon of hese weghed ndces gves us, n herarchcal erms, a prce ndex by produc group, by man group and fnally he oal ndex. The formula used o calculae hs aggregaon s he Laspeyres formula: I where: g I n 1 n n where: 1 1 g I q p g I q p and I p p n n = ndce du mos sous revue I g I I g I q 1 p p n g 1 n and I p pérode de base p and where: I q p where: g I 1 n p 1 I q p p q g g p I n revue and p g I n 1 I = and ndce I he base perod du mos sous revue p q p p q p q p pérode p where: de base 1 1 n andbase I pérode perod p de base base qq p p I = ndce p du mos g sous revue I 1 n = ndce anddu mos sous revue p I he base perod pérode de p base q revue g = p pondéraon du ben dans la p I 1 pérode de base pérode under revue revew base p pérode de base = ndce du ben (respecvemen du I = ndce pose de du dépenses mos sous ) revue du mos sous where: = he ndex for he monh under revew = g = he weghng pondéraon of du durng ben he dans base la perod q p g n I = he ndex of commody (or of expendure I = em ndce ) for he du ben monh (respecvemen under revew du q p pose de dépenses ) du mos sous 1 = he quany of commody surveyed durng where: n q = quané du ben relevée pendan la I I g I = ndce du mos sous = revue he prce of commody durng he g = pondéraon du ben dans la 1 g p = prx du ben pendan la pérode de g = pondéraon du ben = I = he dans ndce expendure la du ben on commody (respecvemen durng where: pérode de base q = pose dépense de dépenses pour le ben ) du pendan mos sous la I = ndce du ben (respecvemen du q p pose de dépenses = g ) = du he pondéraon du ben dans la p mos prce prx sous of commody durng he monh g du ben pendan le mos sous q = revue I = ndce du mos quané sous du revue ben n and relevée pendan la I = ndce du ben (respecvemen du q q = p quané du ben relevée pendan la p = pérode g = pondéraon prx du pose du ben de ben dans de base dépenses pendan la ) du la mos pérode sous de 1 pérode de base revue p = prx du ben pendan revue la pérode de q quané du ben relevée pendan la p = base I = ndce du ben dépense (respecvemen pour le ben du pendan la g = q pondéraon quané du ben du ben relevée dans pendan la la I = ndce du mos sous revue pose pérode de base q p = pérode dépenses dépense pour le ben pérode pendan de base) du mos sous base la p revue = pérode de base I = prx du ben pendan le la mos pérode sous de p ndce prx du du ben ben pendan (respecvemen la pérode du g = pondéraon du revue base p = prx q = ben quané dans la du ben relevée pendan la du ben pendan pose basele de mos dépenses sous ) du mos sous pérode de base pérode revue q p = de dépense base pour le ben pendan la p = revue dépense pour le ben pendan la I = ndce du ben p = (respecvemen prx du ben du pérode pérode pendan basede base la pérode de q = quané du ben relevée pendan la pose de dépenses ) base du mos sous p = prx du ben pendan le mos sous = pérode prx du ben de base revue pendan le mos sous q = dépense pour le ben revue revue pendan la p = prx du ben pendan la pérode de q = quané du ben relevée pérode pendan base de base la pérode de base p = prx du ben pendan le mos sous q p = dépense pour le ben pendan la p = prx du ben pendan revue la pérode pérode de de base base p = prx du ben pendan le mos sous q p = dépense pour le ben pendan la revue pérode de base p = prx du ben pendan le mos sous revue 28 fso Consumer Prce Index 17

20 Mehodologcal foundaons In a classc Laspeyres conex, he weghng s kep consan for a comparavely long perod of me. However, n realy, household consumpon srucure changes consderably from year o year. In order o ake accoun of hs change, he formula for he chaned Laspeyres ndex has been used snce December 21. A chaned Laspeyres ndex s a seres of drec Laspeyres ndces whose weghng s updaed annually and whose resuls are lnked up n order o produce long seres of ndces: CL L L L L 1 CL / L / T 1, b TL 1,b / T 2, b... 2L,b/ 1,b 1L 1 CL L L L L 1 n1 IT,m / IT,m / T 1, b IT 1,b / T 2, b... I 2,b/ 1,b I1,b/ 1 / IT,m / T 1, b IT 1,b / T 2, b... I 2,b/ 1,b I 1 n1 1,b/ 1 n1 where: where: where: CL = Indce-chaîne de Laspeyres du CL / = = he chaned mos Indce-chaîne m de Laspeyres l année de Laspeyres T ndex par for du monh IT,m CL/ m = of mos rappor year Indce-chaîne m T de à compared la l année pérode T wh Laspeyres de par base he base du T,m L / = perod Indce rappor mos de m à Laspeyres la de pérode l année du de T mos base par m T,m L / T 1, b = Indce de rappor l année de Laspeyres à T la par pérode rappor du mos de au base m I = he Laspeyres ndex T,m / T 1, b L = mos de l année Indce de référence T for he monh m of par rappor de Laspeyres b de du la au mos m I year mos pérode T compared la référence plus wh acuelle b reference de la (T-1) monh b T,m / T 1, b de l année T par rappor au T = of he année pérode mos de recen la référence plus acuelle perod (T-1) mos de référence b de la T b = = he year mos année de de référence (consane) b pérode of reference la plus acuelle (T-1) n = nombre mos référence de mallons (consane) T c = he n = monh année of de reference référence (consan) = nombre de mallons n b = he = number mos de of référence lnks (consane) n = nombre de mallons The weghs have been updaed each year (see Chaper 4.2.2) n December (whch represens b n he above formula), snce May To llusrae hese remarks, we have fve lnks for he November 26 resuls, wh May 2=1 as he reference perod: I CL 26, nov / ma 2 I I L 26, nov / déc 25 L 23, déc / déc 22 I I L 25, déc / déc 24 L 22, déc / déc 21 I I L 24, déc / déc 23 L 21, déc / ma 2 Usng he chaned Laspeyres formula herefore makes possble o updae he baske weghs annually and o ncorporae changes o prvae household consumpon srucures que fas, hus makng he resuls more represenave. 17 Excep n December Consumer Prce Index fso 28