January 2023: annual update of the consumer price index (CPI) with reference year 2013 = 100

January 2023: annual update of the consumer price index (CPI) with reference year 2013 = 100

The consumer price index (CPI) with reference year 2013 = 100, which was introduced in January 2014, is a chain index that is updated every year in January. The purpose of the annual updates is to keep the CPI representative over time and to avoid misrepresenting the measured inflation as the index ages.

For the CPI with reference year 2013 = 100, this is the eighth update in a row. With a chain index, the choice of the reference year, i.e. the year in which the average of the index equals 100, is purely mathematical. The current reference year is 2013, which means that the average of the indices at all levels is 100 for that year.

The representativeness and the quality of the chain index are guaranteed over time, among others by keeping the product basket up-to-date, further refining calculation methods, integrating new price sources and by keeping a representative shop sample.

This is an overview of the changes for 2023. The Index Commission, composed of academics and representatives of the social partners, gave a unanimous positive opinion on this to the Minister of Economy. The Minister follows this opinion and the changes will therefore be implemented by Statbel in the consumer price index of January 2023.

Changes to the CPI in 2022

1. Continued use of scanner data and web sraping

Since 2015, Statbel has started with the progressive integration of scanner data and web scraping (so-called big data) as data sources for the CPI calculation. The use of scanner data (cash register data) and web scraping (automatically scraping data from web pages) improves the accuracy of the CPI. Indeed, the price index of a product group should no longer be based on a relatively limited sample of products, but we can process the prices of multiple items sold. This method results in an index that more closely matches actual consumption habits.

The use of scanner data and web scraping also means that the annual addition or deletion of products for the groups concerned is no longer necessary. An example: where previously only 3 products were followed for women's footwear (low shoes, boots and tennis shoes), since 2021 web scraping covers the entire range of footwear (ankle boots, boots, bottines, walking shoes, sandals, sneakers, slippers, etc.).

The table below provides an overview of the segments, together with their weight share in 2023, for which the price evolution is measured with scanner data or web scraping. This comes to a total share of 33% of the weight of the basket, just as in 2022.

Apart from that, there are two new products such as the plinth and the bicycle bell. Furthermore, a sample of recreational courses and lessons (cooking lessons, music lessons, computer lessons, pottery courses, etc.) will replace the single witnessed music lesson.

2. Weighting scheme 2023

Since 2020, the weighting scheme is as also based on the 2018 household budget survey. The weights based on the 2018 HBS were updated to December 2022, based on the price evolution of each product group, since December 2022 is the new reference month for the chain index in 2023.

The explanation for this lies in the fact that a chain index is used. The prices of the 12 months of the current year are always compared with December of the previous year, and the weighting scheme must be adjusted annually on the basis of the price evolution between the year in which the values are expressed, to the same year as the reference month. This procedure is described in the literature as the 'price update' of the weights.

The table below compares the new weightings for 2023 to those for 2022. The large variations for the 12 main groups in the index basket are due to the increase in energy prices (contained in group 4 and the group 7). The relative share of energy in the index basket went from 9.88% to 13.52%; which constitutes an increase of 37%. Within energy, the weight of natural gas increased by 90% (almost doubling), that of electricity by 40%, that of heating oil by 34% and that of motor fuels by 10%. The strong increase in the share of energy, and therefore also of group 4, means that the relative weights of the other product groups in the index basket are falling. An exception to this rule is group 1 "food and non-alcoholic beverages", the weight of which increases with 1.7%. A consequence of the sharply increased inflation for this group in the second half of 2022.

Evolution of the basket weights of the index from 2022 to 2023