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Experience of compiling an Experience of compiling an HICP in NorwayHICP in Norway

CPI workshop

Istanbul, 10- 13 October 2011

Norway• Norway is not an EU-member

• Norway is fully integrated into the EU statistical system, through the EEA agreement

• Norway is part of the EEA agreement together with Iceland and Liechtenstein

• Norway participate on the HICP working groups meetings in Eurostat

– No right to vote, but allowed to make a statement

• Norway participate in Task Force groups– Groups that are working with specific areas in the HICP, i.e.

expanding the COICOP, sampling, etc.

HICP in Norway

• The harmonised CPI (HICP) was introduced in March 1997– Time series starts in January 1995

• Norway participated in the preparation of the HICP since 1993

• Norway is obliged to follow all the regulations for the HICP

HICP and the national CPI • The scope and the coverage of the HICP is somehow

different then the national CPI

• HICP: inflation index and domestic approach– Norwegians and foreigners consumption in Norway

• National CPI: Cost of living index and resident approach– Norwegians consumption in Norway and abroad

• Index reference period is different:– HICP: 2005– CPI: 1998

HICP and the national CPI, cont.

• The price data used in the CPI is used in the HICP as well

• HICP is covering around 83 % of the national CPI

• The following groups are left out: – Owner-occupied housing – included in 2014?– Games of chance – Eurostat is working out a method– Life insurance – left out by definition– Financial Intermediation Services Indirectly Measured (Fisim) –left

out by definition

HICP and the national CPI, cont.

• All regulations is input to decide the methods in the CPI

• CPI and HICP coincide in methods for almost every area

• Exception is OOH:– rental equivalence in the CPI, – net acquisition is part of a pilot study in Eurostat

• But scope and coverage do not coincide!

HICP and users

• HICP is used to compare price growth between countries

• CPI is used to measure the price growth faced by Norwegian households

– In practice this means the inflation in Norway

• The national CPI is more used due to:– A longer time series– Covers more expenditures– CPI with constant taxes is related to the national CPI– More ”well-known”– Dissemination - press release for HICP is not so focused as the

national CPI

HICP in the future

• Will (probably) cover OOH – net acquisition – Purchase of dwellings will be a part of the HICP

• A national HICP with constant taxes (HICP-CT) will be developed

– A regulation for HICP-CT will soon be concluded

• The time series become better each year

• Will the users in Norway prefer HICP to the national CPI?

HICP in the future, cont.

• But what about the domestic approach ?

• Is this approach possible when consumers are doing their purchases on the internet from foreign enterprises?

– HICP should measure price growth in the Norwegian territory

• Is purchase from foreigners enterprises on the internet still consumption expenditure that takes place in the Norwegian territory