CONSUMER PRICE INDICES

NOTES ON METHODOLOGY

Definitions

Consumer price index (CPI) is used as a general measure of inflation in the Republic of Croatia and reflects the changes in the prices of goods and services acquired, used or paid over time by a reference population (private households) for consumption purposes. In addition, it is 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.

Harmonised index of consumer prices (HICP) is a set of European consumer price indices calculated according to a harmonised approach and a special set of definitions, which enable a comparable measure of inflation in the euro area, the European Union, the European Economic Area, and in candidate countries.

CPI and HICP are calculated on the basis of the same representative basket of goods and services. The main difference is the coverage of the population (HICP includes the total consumption of institutional households and non-residents in the economic territory and this consumption is not included in the national consumer price index).

While the CPI is most often applied as a general measure of inflation within the national framework, the HICP is a comparable measure of inflation among the countries of the European Union.

Harmonised index of consumer prices at constant tax rates (HICP-CT)

HICP-CT is the harmonised index of consumer prices where the rates of taxes on products are kept constant in the observation period compared to the reference period, i.e. through time. In the event of a tax rate change, the difference between the current HICP-CT and HICP indicates the effect of the tax rate change on the price changes assuming that changes in tax rates are applied instantaneously and fully.

Coverage and price collection

The CPI covers all goods and services purchased by the reference population for the purpose of final consumption. Imputed rents, expenditure on lotteries and gambling as well as life insurance services are not included.

Most of the prices of goods and services from the basket are collected by authorised price collectors using tablet computers at nine geographical locations (Zagreb, Slavonski Brod, Osijek, Sisak, Rijeka, Pula, Split, Dubrovnik and Varaždin). For the selected products from the basket, price collectors independently choose a specific product offer whose price will be recorded at the outlet. In order to make sure that collectors record the prices of the same items each month as well as to monitor which product offers are selected at outlets, price collectors also record a pre-defined set of additional product characteristics. Such a method of price collection enables the monitoring of changes in prices between two periods, but not the comparison of average prices between different geographic locations.

In addition to the prices collected directly by price collectors at outlets (local price collection), data on nationally homogenous prices are collected directly from reporting units or via the internet (central price collection).

The majority of prices collected using the traditional method are monitored once a month, on approximately the same day of the month. The prices of agricultural products sold in marketplaces and the prices of passenger air transport are recorded twice a month. The prices of fuel for passenger cars, the prices of package holidays, the prices of apartment rents, and the prices of accommodation in camps are recorded weekly. The prices of schoolbooks and education fees are recorded once a year.

In addition to the traditional data collection method for selected groups of products (market rents, household appliances, and electronics), prices are also collected twice a week using the web scraping technique. Since January 2025, concerning the selected products according to the European Classification of Individual Consumption according to Purpose (hereinafter referred to as: ECOICOP) in the categories of Food and non-alcoholic beverages and Alcoholic beverages, scanner data for the first two full weeks from three retail chains (Monday to Sunday) have been used for the calculation of indices.

Weights

The weights used for calculating the indices reflect the relative importance of the sampled goods or services in the total consumption of 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 (HBS), which is supplemented by available additional data sources.

The main data source for determining the weights for the calculation of the HICP at higher levels of aggregation are the national accounts data, whereas for lower levels of aggregation, the data from the HBS are used.

Classification

The classification of products is carried out according to ECOICOP.

Calculation of indices

The traditional data collection method

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 aggregate indices at the level of geographical locations, elementary aggregate indices at the national level are then calculated using the formula for the weighted arithmetic mean.

Scanner data

For each retail chain, average unit prices at GTIN code level are calculated, dividing the turnover by the quantities sold per item. A dynamic basket uses a set of filters and algorithms to select a matched sample of items for each month compared to the previous one. From the calculated average unit prices at GTIN code level which constitute the elementary aggregate, the geometric mean of the price relatives for each retail chain is calculated by comparing all unit prices of the current month with the unit prices of the previous month (unweighted Jevons formula).

For each elementary aggregate by retail chain, indices are calculated in relation to the reference period (December of the previous year). From monthly indices in relation to the reference period, indices of elementary aggregates at the national level are calculated by the weighted arithmetic mean, with the weights of retail chains constituting their market shares.

Aggregating of indices

Aggregated indices, i.e. indices at higher levels according to the Laspeyres-type formula, are calculated using weighted arithmetic mean from integrated individual indices of elementary aggregates.

ABBREVIATIONS

ECOICOP    European Classification of Individual Consumption according to Purpose

GTIN           Global Trade Item Number