NOTES ON METHODOLOGY

Consumer price index

Definition

Consumer price index (CPI) is used as a general measure of inflation in the Republic of Croatia and reflects the changes in prices of goods and services acquired, used or paid over time by a reference population (private households) for consumption purposes. It is also used to guarantee the value of contracts with index clauses (e.g. for indexing wages and salaries in collective agreements, for indexing pensions, etc.), as well as for the comparison of the price movements within a particular country between different economy sectors, it can serve as a basis for deflating individual categories of national accounts data and other statistical series, as well as for analytical purposes.

Price collection

Prices for the majority of products from the basket are collected by authorised price collectors at nine geographical locations (Zagreb, Slavonski Brod, Osijek, Sisak, Rijeka, Pula, Split, Dubrovnik and Varaždin).

In addition to the prices collected directly by price collectors at outlets, data on nationally homogenous prices are collected directly from reporting units or via the internet. The prices for selected groups of products are collected using the web-scraping technique.

Weights

The weights used for calculating the CPI reflect the relative importance of the sampled goods or services in the total consumption of resident households within the domestic territory.

The main data source for determining the weights used in the calculation of the CPI is the Household Budget Survey.

Classification

The European Classification of Individual Consumption according to Purpose (ECOICOP) is used for the classification of products.

Calculation of indices

The calculation of the CPI begins with the computation of the elementary aggregate indices.

The elementary aggregate indices are compiled as a ratio of the geometric means of prices for each geographical location. It means that prices for product-offers within elementary aggregates in the current month are compared to prices of the reference period (December of the previous year). From elementary indices at the level of geographical locations, elementary aggregate indices at national level are then calculated by using the formula for the weighted arithmetic mean.

Elementary aggregate indices at national level are aggregated to higher index levels using the Laspeyres’ type formula.