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FAQ - Frequently asked questions on consumer prices

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1. What does the term “inflation” mean?
2. What does a loss of purchasing power mean?
3. How is inflation measured?
4. Where can I find the figures on consumer price indices?
5. Which prices are recorded to calculate the consumer price index?
6. How are the goods and services in the basket selected?
7. Is the basket always the same?
8. Where are prices collected?
9. How are the figures collected?
10. When and how often the prices are monitored?
11. Are discounts monitored, too?
12. Are consumer price figures checked?
13. What happens once each price has been recorded?
14. How are seasonal products indices calculated when seasonal products are out-of-season?
15. Why do consumers sometimes have the impression that price dynamics are different from that recorded by Istat?
16. Why do some items, such as housing rentals or car insurance, seem to weigh much more on household budgets than the weight attributed to them in the basket?
17. Why is the expense of dwelling purchase not considered when calculating inflation?
18. Is there a way to calculate how price variations affect the purchasing power of households, depending on their spending habits?
19. How are consumer price indices published?
20. Are Eurostat, the European Union Statistics Bureau, indices different from those published by ISTAT?
21. Which consumer price index is used to update rentals, maintenance payments and TFR employee leaving indemnity?
22. How do I calculate the monthly rate of change?
23. How do I calculate the annual rate of change?
24. How do I calculate the annual average rate of change?

1. What does the term “inflation” mean?

The term “inflation” refers to the phenomenon of a continuous and generalized rise in prices, leading to a reduction in the purchasing power per unit of money over time (in contrast, “deflation” takes place if prices show a widespread and persistent downward trend). A rise of inflation corresponds to an increase of the speed of price growth, while a decrease of inflation occurs when prices, although rising, grow at a slower speed.

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2. What does a loss of purchasing power mean?

A loss of purchasing power implies a reduction in the number of goods and services that can be bought with a fixed amount of money. If the prices of products rise over time, with the same amount of money spent, consumers will be able to buy an ever smaller quantity of the same products.

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3. How is inflation measured?

Inflation is measured as the price change of a large group of goods and services (known as “basket”), representative of the household consumption expenditure. In Italy, as in other European Countries, the index is calculated by the National Institute of Statistics. ISTAT produces three different indices: the Consumer price index for the whole nation (NIC); the Harmonized Index of Consumer Prices (HICP) and the Consumer price index for blue and white-collar worker households (FOI). NIC is used to measure national inflation. HICP is used for the comparison of inflation among the EU Member States and is calculated basing on a shared conceptual, methodological, and technical framework; FOI is generally used for monetary revaluations.

Concerning NIC and FOI, in 2023, the basket includes 1,885 items (from pasta to passenger air transport, from bread to personal computers, or from petrol to coffee at a bar, etc.) representing the universe of products purchased by households. The 2023 HICP basket is made up of 1,906 items.
Since March 2012, Istat has been also releasing HICP at constant tax rates (HICP-CT) which follows the same computation principles as the HICP but it is based on prices “at constant tax rates”, which are estimated canceling out the effects due to changes in indirect taxes (VAT, excise duties and other taxes on some specific items).

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4. Where can I find the figures on consumer price indices?

The updated figures can be found in the I.Stat data warehouse and at Statistical Information Centre.

From the point of view of territorial disaggregation, the NIC and FOI indices (both from January 1996) are disseminated at the national and sub-national level, while the HICP (since January 2001) and HICP-TC (since January 2002) indices are disseminated only at the national level. Finally, in I.Stat, together with monthly and annual average indices, percentage rate of changes (on monthly, annual and annual average bases) and weights are also available.

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5. Which prices are recorded to calculate the consumer price index?

With reference to FOI and NIC indices, in 2023 the prices of 1,885 representative goods and services, included in the basket, are collected on a monthly basis (1,906 for the HICP).

According to the COICOP classification, products are classified into 12 expenditure divisions: Food and non-alcoholic beverages; Alcoholic beverages, tobacco; Clothing and footwear; Housing, water, electricity, gas and other fuels; Furnishings, household equipment and routine household maintenance; Health; Transport; Communication; Recreation and culture; Education; Restaurants and hotels; Miscellaneous goods and services. Within each division, a weight is attached to each single good or service, which reflects its relative importance in terms of budget share in the consumption expenditure of households. For example, in the NIC basket, the weight of bread is a bit more than 0.8% while for cars it is about 3.7% and almost 2.3% for a restaurant meal.

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6. How are the goods and services in the basket selected?

The products in the basket and the weight attributed to them are defined according to household consumption expenditure, in order to represent the structure of the population’s consumption. Each year a sample is specified, which is made up of the products whose price dynamic is representative of that of a wider range: for example, to calculate the variation in prices of the “Small electrical appliances” consumption segment, the prices of plugs, electric batteries, adapter plugs, LED bulb are monthly collected.

The identification of major household expenditure aggregates and the estimation of their weights is carried out using as main source National Accounts data on household final consumptions. These major expenditure aggregates, up to the selection of single products and the estimation of their weights, are detailed using several sources available both inside (Household consumption expenditure) and outside ISTAT (figures from A.C. Nielsen, SIAE, etc.) in order to ensure an accurate coverage.

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7. Is the basket always the same?

No, each year both the products in the basket and their weights are updated, in order to take into account changes in the household purchasing behavior and in the range of products offered on the market. In 2023, the main products added to the basket to represent the changes in the household spending patterns or to improve the coverage of expenditure aggregates already represented in the basket, are: Sports medical examination, Smartphone repair, Smart speakers assistant, Organic range for some fresh fruits and for some fresh vegetables, Seedless grapes, Gold kiwi, Gentle lettuce, Freshly caught tuna, Farmed fresh turbot, Women’s leggings, Radiography, Beauty massage.

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8. Where are prices collected?

In 2022, the survey on the fields takes place in 79 municipalities (19 regional chief towns, 59 provincial chief towns and a municipality with more than 30 thousand inhabitants), which participate in the indices calculation of all representative items included in the basket. In addition, other 12 municipalities participate in the survey for a subset of products, including local tariffs and some local services. Prices are collected in more than 44 thousand statistical units (outlets, including small retailers, large-scale distribution and local markets; enterprises; institutions). Around 2,7 thousand dwellings are selected to collect rents for social housing. Overall 398 thousand price quotations are locally collected each month. The selected statistical units are updated every year by municipalities according to changes in consumer habits, the local distribution of retail trade and the urban structure of the territory, in accordance with ISTAT recommendations.

About 189 thousand price quotations are directly collected by Istat, while about 33 million price quotations (scanner data) came from the Association of Modern Distribution.

Moreover, in 2023, more than 167,000 price quotes are monthly used to estimate the consumer price indices of automotive fuels, collected in 16,500 fuel stations covering the entire national territory. Finally, concerning rents, one million and half house rent prices are provided by the Real Estate Market Observatory of the Tax Office.

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9. How are the figures collected?

Data are collected from different sources and with different technologies:

  • the traditional price collection on the fields, conducted by Municipal Offices of Statistics, covers 51,3% of the NIC basket (in terms of weight);
  • the centralized price collection (24.8% of the basket in terms of NIC weights) is carried out directly by Istat by means of automatic data download techniques (web scraping), from the Internet or by acquisition from large data providers;
  • prices of grocery products are collected through scanner data with regard to the large scale retail trade distribution channels (13.6% of the basket);
  • the administrative sources are also used: the database of fuel prices of the Ministry of Economic Development for the price collection of automotive fuels (5.8% of the basket); the data provided by the Real Estate Market Observatory of the Tax Office (introduced this year) for the survey of the prices of real rentals for private dwellings (which weighs 2.6%) and the Excise, Customs and Monopolies Agency for the survey on tobacco products, which accounts for 1.9% of the basket.

With reference to the survey on the field, at the beginning of each year, Istat sends to the Municipal Offices of Statistics a list of the products to be collected, where each good or service is accompanied by a series of specific information (e.g. packaging type for food and household goods or model and fabric for clothing, allowing for the same product to be collected all over Italy. For each product, the data collector is responsible for identifying, within the selected outlet the most sold elementary item (“product offer”) within those ones that have the characteristics set out by Istat. The price of the same product will be monitored every month for a whole year.
As for the centralized data collection, it includes:

  • those products that have the same price in the entire national territory (such as tobacco, periodicals, medicine of class A);
  • telephone services;
  • some transport services;
  • national and international package holidays;
  • products that are subject to constant technology changes (computers, mobile phones, etc.);
  • some recreation services (campsites, bathing establishments, farm holidays, etc.).

The central survey is mainly carried out via Internet also by new data collection techniques which use web scraping automatic procedures.

Concerning the prices of grocery products (processed food, goods for cleaning and ordinary maintenance of the house and personal hygiene and beauty products) it is carried out using data scanner and affects five distribution types of the large-scale retail trade: hypermarkets, supermarkets, discounts, small sales areas ( also known as “self-service”, points of sale with an area between 100 and 400 square meters) and specialist drugs. The constant use of information from large-scale retailers to estimate inflation was made possible thanks to the fruitful collaboration of the Association of Modern Distribution and the main chains operating in Italy. The agreement provides for the data to be acquired by Istat through the A.C. Nielsen firm, subject to authorization for the use of data by large-scale retail chains.

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10. When and how often the prices are monitored?

With regard to the data collection of the field, the price survey is carried out in the first fifteen working days: twice a month for those products that show sharp and irregular price changes within the month (fresh fruit, vegetables and fish, heating oil); three times a month for hotel room prices and once a month for the other products. Concerning the centralized data collection, prices are usually collected once a month in the first fifteen working days of the month with some exceptions (transport, newspapers and periodicals, touristic, recreational and cultural services, etc.) for which prices are collected on different temporal occasions within the reference month. With regard to automotive fuels, the price survey (coming from the database of the Ministry of Economic Development) is carried out 3 times per month: on the first, the eleventh and twenty-first day of the month (there were 2 prices detection up to February 2022, the first and fifteenth of the month; from March 2022, the number of price surveys was increased to capture, in a more timely manner, price changes and interventions on excise duties and VAT; on March 2022, following the reduction in excise duties on petrol, diesel and LPG starting from the 22nd of the month, the third survey was prepared taking into account the intervention in the last part of the month). With regard to data scanners, Istat acquires the weekly data of turnover and quantities distinct by GTIN (bar code) and for every single point of sale of the 19 large groups of large-scale distribution in Italy for all 107 provinces of the national territory. The sample of points of sale is representative of the entire universe of the five types of large-scale distribution and includes about 4 thousand points of sale allocated throughout the country.

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11. Are discounts monitored, too?

Yes, they are. For the HICP calculation, discounts are collected if discounts are temporary, or rather they are applied in the occasion of extraordinary sales (selling-off, end-season sale or sales promotion, provided supplied product has an adequate range of models).
Starting from 2014, the discount survey has been extended to cases of “take 2 pay 1” or “take 3 pay 2” and to reduction prices related to the possession of “loyalty cards” which can be acquired for free.
NIC and FOI indices include discounts only when applied without interruption for a period longer than three months.

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12. Are consumer price figures checked?

Checks take place both on a local and a central level. In particular, with reference to the data collection on the field, the Offices of Statistics in the municipalities involved in the survey must provide Istat with a list of the single outlets visited and the products recorded in each of them. Furthermore, by Law, each municipality must establish a Municipal Control Commission, chaired by the mayor or his delegate, with the task of verifying the prices collected, the methods by which the figures are processed according to Istat recommendations and the correspondence between the number of data collectors employed and the real needs of the survey. Istat, in its turn, performs checks and coherence controls on the information received from both the 79 municipalities which participate in the indices calculation of all representative items included in the basket and the 12 municipalities participating in the survey for the subset of products which include local tariffs and services.

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13. What happens once each price has been recorded?

Using the price quotations recorded in the municipalities involved, those recorded on a central level and those coming from administrative sources, Istat draws up an elementary index for every single product. The elementary indices are then aggregated to produce the indices of the higher levels of the classification at the regional, macro-areas and national.

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14. How are seasonal products indices calculated when seasonal products are out-of-season?

Seasonal products are mainly fresh fruit, fresh vegetables and clothing and footwear products. For those goods, in accordance with the European Regulation on the treatment of seasonal products in the HICP n. 330/2009, Istat has defined a monthly calendar that establishes the months when a product has to be collected and the months when it has not. When a product is not collected because out-of-season, in that month, its price is estimated. The estimate is carried out applying to the last price available the change in observed prices on average over all seasonal products which, in that month, are in-season in the same group. For instance, concerning the men’s suit, the basket includes both the winter and the summer ones; starting from March, the winter suit is no more surveyed and from then its price is estimated applying to the last price available the change observed in prices of summer suit.

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15. Why do consumers sometimes have the impression that price dynamics are different from that recorded by Istat?

First of all, it should be noted that the consumer price index measures price variations in the whole range of goods and services available to purchase in the Country. In other terms, the index considers the Country as it were one big family of consumers. The expenditure habits of an individual consumer, of course, may differ from those of the population as a whole. Hence there are difficulties for some consumers, in some cases, to recognize in the overall price variations of the entire present population’s expenditure the dynamics of prices referred to their own daily expenditure.
In practice, some products which undergo marked price rises, can be purchased frequently and/or can have a high weight in the budget of an individual consumer but have a low incidence on the expenditure of the entire population (for example, a commuter who spends a high proportion of his income for a train pass, in the presence of a marked increase of prices of rail transport, can hardly recognize in the change of the all-item index where the weight of transport by train on NIC general index is a bit less than 0.3%); likewise some products which undergo marked price decreases can be among those less frequently purchased and with low weight on the budget of an individual consumer but can have a high incidence on total expenditure of the population as a whole (for example, a consumer who does not own a car will have few benefits from a significant decline of car insurance prices, which, instead, weighs in the NIC basket about 1.1%).

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16. Why do some items, such as housing rentals or car insurance, seem to weigh much more on household budgets than the weight attributed to them in the basket?

Housing rentals weigh about 2.7% of the basket (considering NIC) because only 21.1% (survey EU-SILC 2019) of Italian households live in rented accommodation. The all-items index is of course affected by this phenomenon: in practice, an expense sustained by 16.5% of the Italian households is spread over the entire population. The weight of vehicle insurance, which has an impact of about 1.2% on the NIC general index, is considered by evaluating the premiums paid by households during the year net of compensation (i.e. it takes account of the compensation paid to households in the case of a claim). Its weight in the basket reflects this calculation method which, at first glance, penalizes households that did not present any claims, since they pay the premium but do not receive compensation. Once again, households in Italy are considered single-family that sustain a single expense (the insurance premium) and receive a single compensation. This evaluation method is also used in most European Countries, in compliance with an EU regulation.

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17. Why is the expense of dwelling purchase not considered when calculating inflation?

According to the European system of national and regional accounts (Esa 2010), dwelling purchase represents an expense for investment and not consumption. Nonetheless, the calculation of consumer price indices does consider the expenses associated with housing: water supply, electricity, fuel (gas or heating oil), expenses for minor housing repair and maintenance (electrician, plumber, construction workers, tiles, bathroom taps, etc.) and housing association costs.
With regard to house prices, in accordance with European Regulations (the Regulation (EU) 2016/792 of the European Parliament and of the Council of 11 May 2016 on harmonised indices of consumer prices and the house price index and Commission Implementing Regulation (EU) 2020/1148 of 31 July 2020), from October 2012 Istat publishes quarterly the House Price Index (HPI, see Italian IPAB) which refers to all residential properties purchased by households for own-occupancy or as an investment. Furthermore, Istat releases to Eurostat price indices which cover residential properties purchased by households only for their own use (OOH, Owner Occupied Housing indices). The OOH indices are currently published on the Eurostat website but are not yet integrated into the HICP, as required in Regulation 2016/792, as they do not correspond in terms of frequency and timeliness (as emerged from the 2018 Commission report). At the moment, the possibility of calculating aggregate OOH indices at a European level is being evaluated while the methodological work necessary for their integration in the calculation of inflation continues.

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18. Is there a way to calculate how price variations affect the purchasing power of households, depending on their spending habits?

Yes, there is; but it must be emphasized that the inflationary impact on household expense budgets depends on the spending habits of the single household. In fact, each household has different behaviors and purchases goods and services, that are different in terms of quantity and characteristics and in different types of outlet (traditional store, supermarket, hard discount etc.), taking into account its available income, the age and the professional condition of its members and so on.
Given the difficulty in identifying the structure of consumption by income classes, it was decided to estimate the impact of inflation on households, distinguished according to their levels of consumption (starting from the first household group with the lowest spending power until the last household group with the highest spending power). Therefore, from 2013, Istat calculates, and releases quarterly, the HICP indices referred to different groups of households, which are defined according to their consumption expenditure level. For each group, different weighting systems are estimated in order to take into account the relative different relevance of the expenditure items in the household budget.

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19. How are consumer price indices published?

Concerning NIC and HICP indices, dissemination takes place monthly with two press releases: with the first one (generally published at the end of the reference month), a flash estimate of inflation is released; with the second one, final data on inflation, which take into account all data and the ending of editing operations, are released. For FOI and HICP-CT indices, dissemination takes place only when final data are released. At the same time of Istat’s final estimate of inflation release, also 3 municipalities disseminate directly, by press release, the estimate of inflation (measured by NIC) referred to their territory.

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20. Are Eurostat, the European Union Statistics Bureau, indices different from those published by Istat?

They are the same figures. In fact, the HICPs are calculated, released and sent to Eurostat by Istat on a monthly basis, according to a pre-established calendar. Eurostat, in its turn, publishes the harmonized indices for the single EU Countries and uses them to calculate and release the synthetic European index.

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21. Which consumer price index is used to update rentals, maintenance payments and TFR employee leaving indemnity?

Monetary values, such as rentals, maintenance payments for separated partners and TFR indemnity, are periodically updated using the Consumer price index for blue- and white-collar worker households (FOI) net of tobacco. The figures can be found in the Price index for monetary revaluations section. Furthermore, starting from December 2011, on the Istat website the system Rivaluta is available and it permits to carry out updating of monetary values by the calculating instrument. Finally, an automatic response system is also active at the following number: +39 06 4673.3105.

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22. How do I calculate the monthly rate of change?

The percentage rate of change between the index of one month m and that of the previous month, m-1, is equal to their ratio, multiplied by 100, less 100; the final result is rounded to 1 decimal place.

For example, the percentage rate of change between the index of February 2011 and the index of January 2011 is

formula1

the final result is rounded to 1 decimal place.

If the reference base for the indices compared is different, the splicing coefficient is used. For example, with the updating of the reference base year to 2015 for NIC and FOI indices (the previous base was 2010=100) starting from data of January 2016, the percentage rate of change between the January 2016 and December 2015 indices is

formula2

the final result is rounded to 1 decimal place.

CR is the splicing coefficient from the reference base year 2010 to the reference base year 2015 and it is equal to the average index of 2015 expressed in the base year2010, divided by 100.

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23. How do I calculate the annual rate of change?

The percentage rate of change between the index of month m in year t and the index of the corresponding month of the previous year t-1 is equal to their ratio multiplied by 100, less 100; the final result is rounded to 1 decimal place. For example, the percentage rate of change between the index of February 2015 and that of February 2014 is

formula3

the final result is rounded to 1 decimal place.

If the reference base for the indices compared is different, the calculation uses the splicing coefficient. For example, with the updating of the reference base year to 2015 for the NIC and FOI indices (the previous base was 2010=100) starting from data for January 2016, the percentage rate of change between the February 2016 index and the February 2015 index is

formula4

the final result is rounded to 1 decimal place.

CR is the splicing coefficient from the reference base year 2010 to the reference base year 2015 and it is equal to the average index of 2015 expressed in the base year2010, divided by 100.

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24. How do I calculate the annual average rate of change?

For the NIC and FOI indices, the percentage rate of change between the average index of year t and the average index of year t-1 is equal to their ratio multiplied by 100, less 100; the final result is rounded to 1 decimal place.

For example, the percentage rate of change between the average index of 2015 and that of 2014 is

formula6

the final result is rounded to 1 decimal place.

If the reference base for the indices compared is different, the calculation uses the splicing coefficient. For the use of coefficients in calculating the percentage rate of change between indices on different bases, please refer to the Methodology notes attached to the Press release – Consumer prices.

Otherwise, in line with Eurostat recommendations, for the HICP index the annual average rate of change is obtained directly from the monthly indices; therefore, for example, the percentage rate of change between the average index of 2015 and that of 2014 is

formula7

the final result is rounded to 1 decimal place.

Date of Issue: 23 June 2023

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