Impact of the COVID-19 on the index calculation and the measurement of inflation

COVID-19 can have a direct or indirect impact on household consumption, as well as on the measurement of inflation. An explanation of how this is methodologically incorporated into the consumer price index (CPI) and the harmonised index of consumer prices (HICP) is given here below.

The principles applied and the explanations described in detail below for the various product groups are in line with the methodological recommendations drawn up by Eurostat in consultation with the National Statistical Institutes (Statbel in Belgium) and are available here.

1. General principles

The general principles on which the index calculation is based in the current situation are the following:

• Stability of the weights of the indices published;
• Publication of indices for all product groups in the consumer price index;
• Minimizing the number of imputed prices.

Every year, the weight of the product groups in the consumer price index is largely based on the estimated average consumption expenditure of the previous year. These weights are kept constant throughout the year. Monthly fluctuations are never taken into account. For the reasons mentioned above, this is not the case now. Under normal circumstances, there is for example little consumption for amusement parks in certain months.

The publication of all indices ensures that higher levels can be calculated from lower published levels and that the aggregation of the consumer price index remains consistent.

Minimizing the number of imputations (= taking into account missing actual prices using the most appropriate replacement values) ensures that missing prices are replaced as much as possible by actual prices, so that the measurement of inflation remains based on real prices. When imputations are used, these should be also be self-correcting when actual prices become available again.

2. Imputation for travel-related prices

The restrictions that until recently applied to travel made it difficult to compare current prices with those of the past (travel was also strongly discouraged). For this reason, the prices of sectors related to travel were also imputed. This imputation is also still applied this month.

For the imputed sectors, prices were carried forward, but also adjusted with the monthly price change of the previous year. So this means that the monthly change of this year corresponds to that of last year, and that the inflation rates of June for these sectors are similar to those of the previous months.

3. Share of the consumer price index that is currently based on actual prices and prices carried forward (with or without a seasonal correction factor).

The share of the index basket for which the price evolution is based in June on effective price observation and prices carried forward with a seasonal correction factor is shown here below:

• actual price observation: 96.4%;
• prices carried forward with a seasonal correction factor: 3.6%.

4. List of product groups that are currently affected

List of affected product groups with prices carried forward with a seasonal correction factor: