Inflation measures for population subgroups

In April 2013, Istat has started the release of a new set of indicators with the aim of providing a measure of the effects of the inflation on five different population subgroups, defined according to the consumption expenditure level of the households.

The five subgroups have been identified sorting households on the basis of the amount of equivalent expenditure (that is calculated taking into account the size of each household) and then dividing them in 5 subgroups of the same size so that in the first group there are the households with the lowest level of expenditure and in the last group those ones with the highest level of expenditure. For each of the previous groups, different weighting schemes were estimated.

The indices of five subgroups share the set of basic information (basket of products and price elementary data) and the methodology of Italian HICP but they differ with one another for the system of weights used for their calculation.

Regarding weights, figure 1 shows that the share of expenditure for food and energy goods is inversely correlated with the level of total expenditure. In more details, with reference to the households of the first group of the distribution (i.e. the 20% of those with the lowest equivalent expenditure), the weights of food and energy goods are significantly higher than the corresponding weights in the Italian HICP and almost double as compared to the weights estimated for the households of the last group (the 20% of population with the highest equivalent expenditure).

At the opposite, the incidence on the households expenditure of Non-energy industrial goods, Services related to transport, Other services and, to a lesser extent, the incidence of the Services related to recreation, culture and personal care increase together with the increase of the level of total expenditure.

In the first quarter of 2013, inflation rates of the households of the five subgroups of expenditure considered were comprised between +2.5% of the first subgroup and +1.8% of the last one; on the same period the rate of change of Italian HICP was +2.1% .

From 2005 to 2012, the all-items index calculated for the households in the first group of the distribution, increased by 20.2%, as compared to +17.5% of the HICP and to +16.3% of the corresponding index for the last group. In the same time interval, the enlarging of the spread of the inflation rates calculated for the households of the extreme subgroups were mainly due to the wide fluctuations detected by the prices of energy goods and food, whose weights tend to be higher, the lower the level of total expenditure.