Upcoming changes to the CPI in February

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From next month weights will be updated, as well as the goods and services range in the consumer price index (CPI) and the harmonized index of consumer prices (HICPI). The weights will reflect the changes in consumer composition caused by the corona pandemic.

Written by: Hamdi A. Mohamed

As for the January indices for the CPI and HICPI, which will be published on 10th February, the weights, and the goods and services range will be updated. This is a standard, annual procedure that provides an opportunity to capture changes in the composition of consumption and new available goods and services.

The Corona pandemic and its effect on consumption composition in 2020

According to annual practices, the CPI and HICP will, as of the January dissemination February 10th, contain updated weight structure and basket composition. 

National accounts data and other relevant information is used to obtain expenditure shares for the compilation of weights in the CPI and HICP. National accounts data are typically lagged by two years, however in normal times this is less problematic as expenditure shares tend to show only minor changes from one year to another. The corona pandemic has on the other hand entailed drastic changes in consumer behavior during 2020. As a result, the expenditure shares of 2019 are no longer representative for 2020.

In accordance with international recommendation, Statistics Norway will take measures to account for the changes in the consumption pattern during 2020. More precisely, the monthly National accounts data of 2020 will be used together with the National accounts data of 2019 to compile the 2021 CPI and HICP weights.  

Multilateral method for food and non-alcoholic beverages

Other methodological changes will also be implemented as of the publication of the CPI for January 2021, published on 10th February. Statistics Norway will introduce a new calculation method and changes in the aggregation structure below item level (such as rice) in the price index for food and non-alcoholic beverages. The new calculation method is a multilateral method that deviates from traditional price statistics methodology in that more than two periods are used in the calculations. A new data source and calculation method for airfares will also be introduced in the CPI.

More information concerning the update of weights and other methodical changes will follow on 10th February.

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