The INE incorporates masks and the online press to calculate the CPI and leaves out DVDs and CDs




In order to adapt prices to household consumption habits, the INE has introduced
changes to calculate the CPI
. These changes are made every five years. Thus, from this year the INE will use the 'base 2021'. Two of the most important operations carried out are the revision of the shopping basket and the updating of the weighting structure.

As reported by Statistics this Monday in a statement, the CPI base 2021 incorporates new treatments for monitoring clothing prices and for processing the lack of price, which will increase the accuracy of the indicator.

The new CPI updates the list of subclasses (aggregations of goods and services at the highest level of detail) of the European classification of consumption, called Ecoicop (European Classification of Individual Consumption by Purpose), which is regularly published.

As a result of this update, based on the relative importance of household spending, 24 subclasses disappear from the CPI calculation, and two new ones are incorporated.

Thus, the number of subclasses that was 221 in the 2016 base becomes 199 in the new base. The selection of products representative of household consumption that make up the CPI shopping basket based on the importance of the expense what is done in each of them. The composition of the basket is reviewed periodically, and is updated to include new products whose consumption is beginning to be significant, and exclude those whose consumption is no longer significant.

The most notable changes to the 2021 base basket configuration are the addition of the hygienic masks and digital press subscription. On the other hand, some examples of items that disappear from the basket are the image player, the portable player or the compact disc and DVD, among others.

As a result of these adjustments, the CPI base 2021 shopping basket now has 955 items (of which 462 are traditionally collected and the rest are collected using scanner data), compared to 977 in the previous base (with 480 traditional collection).

The adaptation of the CPI to changes in consumer behavior also includes the review of its weighting structure. Every year the weight or importance of the large aggregates that make up this indicator is updated, which keeps it up to date. In addition, every five years the complete structure is updated for all levels of disaggregation.

On this occasion, and as happened last year, in order to adapt the CPI to changes in the behavior of households influenced by the atypical situation experienced in the last two years, derived from Covid, the structure of weightings through the usual process, using the information from the Family Budget Survey and the National Accounts for the year 2020, and in addition, action has been taken specifically in those categories of consumption most affected by the covid effect, for which it has been introduced the latest information available from alternative sources.

This process of updating the weights follows the recommendations of the European Statistical Office (Eurostat) and makes it possible to obtain a new structure adapted to changes in household consumption habits in the year after the restrictions caused by the pandemic.

As a result of this updating process, in 2022 the weights of the CPI reflect the new consumption patterns of households and in this way, the CPI reflects the changes in consumer habits that have occurred in the last year. With respect to the previous base, in the new one the groups of Hotels, cafes and restaurants, Medicine, Housing and Transportation. By contrast, the remaining eights lose weight.

electricity prices

One of the technical aspects included in the CPI base change project is the review of the methodology of centralized items (those whose prices are the same throughout the country, and which require specific calculation methods that include all the varieties of each service and types of consumption). One of these articles is electricity, the revision of which consists of expanding the coverage through the incorporation of the liberalized market in the calculation of the CPI.

This change, however, has had to be postponed until obtaining the information that the electricity companies have to provide with a sufficient level of detail and with the necessary technical criteria that allow applying a methodology consistent with the requirements demanded in the calculation of the CPI and, consequently, being able to duly explain the future evolution of the CPI. indicator.

The INE explains that "the erratic situation of the market at this time does not favor the introduction of any methodological change, which could distort the analysis of the evolution of prices throughout 2022 and beyond."

The statistical institute points out that any methodological change that is introduced in the CPI can produce a bias in the measurement of the annual rates throughout the first year of its incorporation. Therefore, the objective is to incorporate the methodological changes in such a way that they affect the results of the CPI as little as possible.

In the case of the inclusion of the free market, the magnitude of the bias depends on the stability in the evolution of prices in the previous year and in the year of the introduction of the new source. How much The greater the price fluctuations, the more important the measurement bias will be.. This requirement has not occurred throughout the year 2021.

It also depends on the availability of accurate information on household consumption and the measurement of price trends. The information currently available does not correspond exactly to the methodology that the CPI calculation must follow, so it is necessary to continue with the work aimed at making this information compatible. In this sense, it is especially important that the information provided refers to the month in which that the household enjoys the service (month of which you want to measure the CPI), in order to comply with the regulations of the European Union.

"For all these reasons, it is necessary to maintain in the coming months the current collaboration of the INE with the electricity companies (to which we must thank the effort they have been making), in order to arrive at a system for obtaining information that is adapted to the requirements of the IPC”, adds the INE statement.

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