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Experiences from compilation of the Hungarian CPI

UNECE/ILO Meeting on CPI

Geneva, 10-12 May 2006

Hungarian Central Statistical Office

Consumer Price Statistics Section

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Difficult items –new circumstances

• pharmaceutical products (additional data source, changes in the subsidies)

• town gas (treatment of tariffs)

• airfares (timing of entering of prices)

• gambling (price determination)

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1. Use of additional data sources -Pharmaceutical products

Background• regulated prices for all kind of medicines till

November 2005 (from that time the non-subsidised medicines have recommended prices only)

• the larger part of medicines are subsidised (60-40%)

• the rate of the subsidy can be changed in every quarter of the year (it can be 100%, 90%, 70%, 50% or a fixed amount)

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Pharmaceutical products

Problem

Reduction of the subsidies – parallel with the price increases the index of

medicines

jumped up

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Pharmaceutical products

1992 1993 1994 1995 1996 1997 1998 1999

Index 178,4 148,1 150,8 153,7 141,6 122,4 114,0 132,9

Weight 0,7 0,8 1,1 1,3 1,4 1,7 1,8 1,8

2000 2001 2002 2003 2004 2005

Index 126,0 110,2 109,3 107,0 107,0 108,6

Weight 1,7 1,9 2,1 2,2 2,2 2,3

CPIs for pharmaceutical products, previous year=100

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Pharmaceutical products Consumer Price Indices, previous year=100

100

110

120

130

140

150

160

170

180

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

%

Total Pharmaceutical products Total without pharmaceuticals

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Pharmaceutical products

Solution

• Enlarge the sample of medicines – cost effectiveness

• Use of some additional data sources besides the traditional data collection practice - administrative database

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2. Treatment of tariffs –Town gas

Background

• price is centrally fixed• same in the whole country• till 2003 there was one single tariff category• from October 2003 there are different

categories according to the quantity of consumption

• October 2003 - a compensation system have been also introduced

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Town gas Problem

• we publish monthly and annual average prices of selected goods and services

• the town gas has significant share in the consumption – we have to publish prices for it

• the ratio of the average prices gives a different result as the published index

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Town gasCategories Base price Current

priceIndex

1 44,8 46,4 103,6105,2

105,1

2 47,9 51,5 107,4

3 56,2 62,7 111,6

4 41,9 42,4 101,3103,05 45,0 47,4 105,4

6 53,3 58,7 110,1

Total 46,1 48,9 106,0

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Town gas

Solution

Publish three separate prices for the first three categories:

consumption up to 1500 m3

1500-3000 m3

over 3000 m3

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3. Timing of entering of prices into the index - Airfares

Background

• Commission regulation

• pricing strategy of the companies

traditional

airlines

low-cost

airlines

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Airfares

Price (HUF) Condition

19500 Budget

29500 Smart choice

41000 Great value

55000 Fully Flexible (B)

103000 Fully Flexible (Y)

119500 Discounted Business

156350 Business

161050 Premium Business

Ticket prices in the case of Hungarian airline

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Airfares Prices of a ticket for a long weekend at the middle of March in the

case of low-cost airlines

Price collection time Wizzair Skyeurope

14 October 2005 15440 29659

15 November 2005 16470 27859

15 December 2005 18640 15980

16 January 2006 18370 20657

15 February 2006 30320 25656

Average price 19245 23388

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Airfares

Problem – question

In which month shall we collect the price of a pre-selected flight?

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Airfares

Solution

• Start to collect prices 6 months in advance

• Apply geometric mean – there is not data on consumer behaviour about the time of booking

• Suppose that the consumer make his decision sensibly

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Price determination – Gambling

BackgroundCommission Regulation (EC) No 1687/98 regarding

the coverage of goods and services of the HICP states in Annex1b that ‘household final monetary consumption expenditure does not cover lotteries and gambling, neither the payment of the service charge to the unit organising the lottery or gambling, nor the residual current transfer that is paid out to the winners (although according to ESA 4.135 service charge is included in final consumption expenditure)’.

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Gambling Problem

• Hungarian CPI contains gambling

• In 2001 the ‘price’ of a lottery ticket was increased from 100 to 130 HUF

• At the same time the prize per ticket was also increased from 43,2 to 58,5 HUF

• How much was the real price increase?

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Gambling Solution

Period Cost of ticket

Prize per ticket

Net loss Net loss (as % of the cost

of one ticket)

1 2 3 4=2-3 5=(2-3)/2

0 100 43,2 56,8 56,8

t 130 58,5 71,5 55,0

% change +30,0 +35,4 +25,9 -3,2

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Thank you for your attention.