1 HICP and CPI differences in Latvia Prepared by Oskars Alksnis Central Statistical Bureau (CSB) of Latvia EU Twinning Project Forwarding Armenian Statistics Through Twinning AM09/ENP-PCA/TP/04 Component E: Harmonized Consumer Price Index Yerevan, 13 July 2012

2 Content of the presentation Development of the HICP in Latvia Legal base in Latvia Implications to the CPI from the adoption of the HICP requirements in Latvia Different use and treatment of CPI and HICP in Latvia

3 Consumer price index family Consumer price index (CPI) – 1991 Harmonized Indices of Consumer Prices (HICP) – 1996 Harmonized Indices of Consumer Prices at Constant Taxes – 2003 Harmonized Indices of Consumer Prices for Administered prices – 2002 House price index (HPI) – 2008 (planed 2012) Owner-occupied price index (OOH) – 2010 (planed 2014)

4 Development of the HICP (1) Implementation of the EU requirements and quality standards (regulations) for the HICP ( ) Regular participation in Eurostat working group meetings on the HICP since Regular partipation in workshops for candidate countries / acceeding countries / new member states ( )  Till 2005 most of international activities financed by PHARE

5 Development of the HICP (2) Latest projects: Pilot work on housing statistics  HPI and OOH,  house sales indicatots,  Commercial property price index Multipurpose price statistics  research on the publication of detailed prices,  adoption of the COICOP 5-digit level,  use of scanner data for price statistics,  use of electronic devices for price collection

6 Legal base HICP legal base: a framework Council Regulation for the establishment of a harmonised methodology for compiling CPIs in the Member States (in 1995). Now there are 18 EU Regulations, setting out a list of standards for the HICP  Coming soon: Regulation on the Owner-Occupied Housing and Regulation on the HICP at constant taxes The framework document governing the official statistics and CSB's activity: the Official Statistics Law of the Republic of Latvia, adopted by the Saeima (parliament of Latvia) on 6 November  Amendment on 15 November 2007 – sets legal rights of the CSB to collect consumer prices in the outlets. Annual state statistical programme, accepted by Latvian government

7 Measures implemented in order to make our HICP compliant with EU requirements (and affected also national CPI): Annual chain-link index has been introduced. Back data on HICP has been provided starting with January 1996; COICOP-HICP classification has been introduced; Regulation on price reductions implemented; The significant goods and services are monitored and introduced in CPI/HICP annually; The minimum standards for the treatment of insurance have been implemented; Prices net of reimbursement for medical products and services implemented;

8 Measures implemented in order to make our HICP compliant with EU requirements (and affected also national CPI) (2): Improved coverage and sample for:  rents,  fuels,  new and used cars,  financial services  package holidays and airline tickets  books; Treatment of seasonal products implemented (since 2011)

9 Implemented Domestic concept; New sub-index on social protection has been introduced; The Harmonized Index of Consumer Prices with Constant Taxes (HICP - CT) implemented; Further development of the OOH and other housing statistics; Changes in national legal legislation needed to produce information necessary for EU. Measures implemented in order to make our HICP compliant with EU requirements (without affecting national CPI)

10 HICPs are designed for international comparison of consumer price inflation among the EU countries which are calculated according to a harmonised approach and a single set of definitions (EU regulations):  Assessment of price convergence in the EU  Monitoring of price stability in the euro area Latvian national CPI is used as:  Compensation instrument (for the indexation of wages, pensions, social benefits, commercial contracts);  Inflation indicator (role for monetary policy, economic analysis)  As a deflator for the National Accounts Different use of CPI and HICP

11 Technical issues:  One price collection;  The same procedure for data checking, validation, imputation, quality adjustment and analysis;  Two sets of weights: national concept for CPI and domestic concept for HICP;  Lotteries and games of chance excluded from the HICP;  Slightly different rounding rules when rates of change has been calculated. Publication issues:  For the CPI press release and data on the Internet database of the CSB (publication at 6th working day);  For the HICP no press release, only data on the Internet database of the CSB (publication at 9th working day). Different use of CPI and HICP (2)

12 Thank you for your attention!