Volume 1: Consumer Price Indices

Luxembourg

Official title

Indice des prix à la consommation (Consumer Price Index).

Scope

The index is compiled monthly and covers all households in the country, except for those of self-employed workers in industry and services and of farmers.

Official base

1990 = 100.

Source of weights

The weights were derived from a household expenditure survey conducted between April 1986 and September 1987, covering 2,764 households representing the whole population. The index covers all households in the country, except for those of self-employed workers in industry and services and of farmers. The weights were not adjusted to take into account price changes between the survey period and 1990.

The items were selected according to their weight in household budgets, as well as their suitability for price observation over time.

The weights of items which were not included because of their small share in household expenditures were allocated to similar items. The value of items not included for political reasons (cigarettes, tobacco and hard liquor, and certain services closely linked to sliding wage scales) was discarded before the calculation of total consumption expenditure.

:hp4.Weights and composition:ehp4.

Major groups Number of items Weights Approximate number of price quotations

Food 91 205.2 2175
Clothing and footwear 42 131.1 800
Housing, fuel and light 11 137.0 600
Furniture, furnishings and household equipment 39 100.8 700
Medical care 27 81.9 300
Transport and communications 24 148.6 275
Education and leisure 37 79.9 700
Other goods and services 32 115.5 850
Total 303 100.0 6400

Major groups	Number of items	Weights	Approximate number of price quotations
Food	91	205.2	2175
Clothing and footwear	42	131.1	800
Housing, fuel and light	11	137.0	600
Furniture, furnishings and household equipment	39	100.8	700
Medical care	27	81.9	300
Transport and communications	24	148.6	275
Education and leisure	37	79.9	700
Other goods and services	32	115.5	850
Total	303	100.0	6400

Household consumption expenditure

With a few major exceptions, the concept of expenditure, i.e. only sums actually disbursed by the household during the period of observation, was used. The value of households' consumption of their own production and the rental value of owner-occupied dwellings were excluded.

On the other hand, the non reimbursed portion of health care costs and employers' and workers' contributions for benefits in kind were included in computing the weights for health care expenditure.

In computing the weights for insurance services, the premium had to be separated from the amount corresponding to the price paid for the purchase of the insurance service itself. Over a long period, the difference between the premiums collected and benefits paid for covered risks represents the cost of the insurance service. The ten-year ratio between this difference and the total of premiums paid is considered as household expenditure on insurance. This method was used to determine the weights for the insurance item.

Method of data collection

Prices are collected each month by agents, from retail outlets, supermarkets and service establishments in the capital and other representative cities in other regions.

Prices for fresh fruit and vegetables, fish and flowers are obtained three times a month.

Official tariffs are obtained from the relevant national or local authorities for electricity, heating oil, water, medical care (medical and paramedical fees and hospital charges) and certain items under Transport and Communications (petrol, railway and bus services, postage, telephone). The price of the transaction (the total price) is always used in computing the index, regardless of the form of payment or the conditions for reimbursement by social security schemes (as regards health care expenditures).

Public education is free of charge. To the extent that certain representative items may not be free, the price paid by the consumer is used in computing the index.

Reduced prices, discounts and rebates are used in computing the index provided the products concerned are available to all consumers in substantial quantities for a period of at least one month, and have the same characteristics as the usual products.

Clearance sale prices are not used, since sales are limited by regulation to 15 days and, furthermore, do not meet the other conditions established for reduced prices.

The prices collected are those quoted on the index reference date, i.e. the first of the month, regardless of the form of payment agreed between buyer and seller.

Second-hand purchases and trade-in of used goods are not taken into account in the index.

The prices used are the final consumer prices to households. Intermediate prices, if any, are not taken into account.

Housing

The rent considered is the price paid by the renter for an unfurnished dwelling, net of service and other charges. The dwellings considered are generally representative of the overall population. No type of dwelling is excluded a priori.

Rent data are collected from individual renters twice a year, with one sixth of the sample surveyed each month. Rent data are collected by telephone (occasionally by mail). The rent index (two separate items: apartment rent and house rent) is the arithmetic average of specific indices computed for each dwelling in the two samples.

Owner-occupied dwellings are not included in the index (as regards expenditure items).

Specification of varieties

The specifications are detailed as regards variety, brand and model. They are the exclusive responsibility of the Service central de la statistique et des études économiques (STATEC) and are confidential.

Substitution, quality change, etc.

If there is a change in quality, either: the product's essential characteristics are unchanged, in which case any change in the price is reflected in the index without adjustment; or the change affects the product's essential characteristics, in which case the part of the price increase due to the quality change is neutralised. In practice, changes in quality are accompanied by changes in price, and it is therefore a question of determining whether the change in price corresponds to the change in quality in whole or in part. If necessary, a full or partial link is carried out.

In future, the goods and services basket will be reviewed every five years. In the interval, its composition remains constant. Nevertheless, if a new product comes on to the market and is widely consumed, it is incorporated in the index by a linking method as a representative variety of an item in the basket.

If an item or quality disappears from the market, it is replaced by another with similar characteristics, ideally in the same outlet. If the new variety is of the same brand and fills the same consumer needs, it is included in the index with account taken of any parallel price variation. If the new variety has basically different characteristics (including customer service), or if it carries another brand name, it is included in the index as a replacement using a linking method.

Seasonal items

Fresh fruit and vegetables have fixed weights: the composition of the representative baskets for each of these items varies each month, as do the weights for the different varieties covered. The computations for these items are based on a 12-month moving average.

Other seasonal items that are not available year-round remain in the index out of season, at the same price as was last quoted, pending their reappearance on the market.

Computation

The index is computed according to the Laspeyres formula as a weighted arithmetic average with fixed base 1990 = 100, using weights corresponding to 1986-87.

Price relatives for the current and base periods are used to compute item indices.

Other information

The general index, group indices, major sub-group indices and indices for several important items are published each month. All sub-group indices are available to the public on request.

Organisation and publication

The index is computed and published each month by the Service central de la statistique et des études économiques, in Indicateurs rapides du STATEC, série A1, Indice des prix à la consommation (Luxembourg).

Idem: Cahier économique du STATEC no. 81, Le nouvel indice des prix à la consommation, Réforme de 1990/91.

Idem: Note de conjoncture (quarterly).

Idem: Annuaire statistique.