The consumer price index is calculated monthly and covers the whole country and all private households. It is the measure of the price changes of goods and services intended for household consumption.
Official base: the base period of the index calculation is December of the previous year. In addition, every month the indices are calculated on the basis of the previous month and the same month of the previous year. All other (quarterly, yearly, etc.) indices are calculated as composite chain indices of the above mentioned monthly indices.
Method of data collection: Selections of representative items (goods and services) as well as the outlets are based on information from various sources (retail trade, regional offices etc.) The purposive selection is concentrated on the volume selling items and outlets proportionate to size. In case of seasonal products „markets” are also selected for price observation.
At present there are approximately 1000 items to be observed monthly in 35–150 outlets depending on their character. Altogether more than eighty thousand prices are collected monthly.
All items to be observed are specified according to quality, trade mark, type etc. In certain cases the price collectors have some freedom to select different varieties in different outlets, but they have to leave them unchanged within a given outlet till the selected commodity satisfies the criteria of representatives and expected continuous availability. Replacements are controlled centrally when necessary. Prices (price indices) for seasonal items are imputed when needed. Certain items like consumption from own production, credit charges, direct taxes, second-hand transactions – except cars – are excluded.
The weights used for the compilation of the Consumer Price Index (CPI) represent the ratio of goods and services within the final monetary consumption of households. From 2012 the weights are based on the provisional macro data of National Accounts relating to the year t-2 while in previous years this data source was completed with the HBS data as well.
The CPI is a fixed base weighted index (Laspeyres type). The weights of the 140 basic headings are the same every month throughout the year.
The calculation of CPI: The price relatives of the representative items are calculated by dividing the average price of the given item of the current month by the average price of the base month. The price index of the 140 basic headings is the weighted mean of the price relatives of the included representative items. The price indices of the main groups and the total consumption are the weighted average of 140 basic headings.
From 2012, CPI does not include the cost of imputed rents which was formerly appeared within group of services. According to the regulation of National Accounts, this item is not considered as purchased consumption thus it is excluded from the CPI. Hence, there are 140 basic headings instead of the preceding 141.
Publication: The price indices of the groups of commodities are published monthly, quarterly and yearly on different bases. The price indices of different types of households using the weights of the family expenditure structure are also published.
The harmonized consumer price indices (HICP) are not and will never be „fully” harmonised consumer price indices, in as much as the aim is comparability and not full harmonisation. The HICPs are not intended to replace national CPIs. All Member States are likely to continue their existing CPIs for domestic purposes.
The harmonized indices were based on existing national CPIs, but the HICPs are harmonized in several methodological areas as well as coverage.
However some difficult categories, including owner occupied dwellings are still not covered by the HICP.
The weights of HICP are based fully on the provisional macro data of National Accounts relating to the year t-2 while in previous years this data source was completed with the HBS data as well. The methodology of the weight calculation is fully in line with the recommendation of the implemented Commission Regulation (EU) No 1114/2010 which is in force from 1 January 2012. Due to the introduction of the methodological and technical improvements of National Accounts in September 2011 i.e. 'Integration of Supply and use tables (SUT) in the national accounts' the structure of the households' consumption has significantly changed (See the HCSO's Communication here). This restructuring has affected the HICP weight system as well in 2012.
The weights should include expenditure by foreign visitors besides the expenditure by all household which takes place on the economic territory of the given country (domestic concept).
The common index reference period has been the year 2005.
In Hungary, the HICP and the national CPI are almost the same taking the view that the two indices should be as similar as possible for the sake of efficiency. The only differences are that:
in the CPI we use approximately the 'national' concept, while the HICP uses the 'domestic' concept,
the HICP does not include the cost of imputed rents – which was also excluded from the CPI from 2012 – and gambling are only observable in the CPI
in case of the HICP prices for services shall be entered into the index for the month in which the consumption of the service at the observed prices can commence.
The core or underlying inflation is calculated in order to obtain the long term „core” component of the inflation by eliminating the one-shot shocks in price development from the consumer price index (CPI).
The HCSO calculates this indicator from the CPI according to the changes in January 2009 by eliminating the following items:
non-processed food items,
electricity, gas, and other fuels,
motor fuels and oils,
pharmaceutical products that are reimbursed by the social security,
services which prices are centrally determined by authorities.
In the course of revising the content of the index, the scope of omitted items expanded in January 2012, mainly in case of services.
From January 2012, the costs of imputed rents are excluded from the core inflation as it was excluded from the CPI also. The core inflation indicator covers 69% of the CPI's items by their weight. After the elimination the remaining items are proportionally re-weighted in order to obtain 100% as the sum of their weights. The core inflation indicator is seasonally adjusted corresponding to the international practice.
The core inflation indicator is calculated on December 1994 base.
The TRAMO/SEATS software is used by the HCSO for seasonal adjustment. TRAMO/SEATS is a stochastic, completely model-based approach to decomposition, usually referred to as ARIMA-based signal extraction method. More»
In consequence of the feature of seasonal adjustment all earlier published seasonally adjusted data can alter monthly retrospectively in each new publication. But the revision of the adjustment model takes place only once a year.
In January 2012, due to the changes in the content of the index we recalculated the time series backward until January 1995. Therefore, the time series of unadjusted core inflation also changed occasionally.
The constant tax rate index (CTI) eliminates from the CPI the impact of changes of the most important indirect taxes (VAT, consumption taxes, excise duties, registration taxes for new motor cars). The CTI shows that how much the CPI would be if the reference period (December of the previous year) tax rates were in force in the current observation period. The aim of the CTI's calculation is the separation of the impact of indirect tax changes within the CPI. CTI is calculated on the base of December of the previous year similarly to the CPI and the same weights are applied for the aggregation of the CTI's sub-indices.
Source of methodology: Methodology of the Consumer Price Index (2000, HCSO, Budapest)