Analytics, EU – Baltic States, Inflation, Lithuania, Markets and Companies

Average annual inflation calculated based on the consumer price index (CPI) was also negative and stood at minus 0.3%.

Average annual inflation calculated based on the HICP

In March 2016, annual inflation (March 2016, against March 2015) calculated based on the HICP stood at 0.8%, the CPI-based one – 1.2%.

In March 2016, against February, the increase in prices for consumer goods and services calculated based on the HICP stood at 1.1%. The increase in prices calculated based on the CPI stood at 1%.

Table 1. Rates of change in prices for consumer goods and services calculated based on the HICP, March 2016

______________________
¹ Classification of Individual Consumption by Purpose adapted for the needs of Harmonized Index of Consumer Prices – COICOP/HICP

Table 2. COICOP/HICP classes of consumer goods and services whose rates of change in prices had the biggest impact on the overall price change

The overall change in consumer prices is influenced not only by the size of the price change for a certain product but also by the relative share (weight) of expenditure on that product in the total consumption expenditure

Pursuant to Commission Regulation (EU) No 2015/2010 of 11 November 2015 amending Regulation (EC) No 1708/2005 laying down detailed rules for the implementation of Council Regulation (EC) No 2494/95 as regards the common index reference period for the harmonised index of consumer prices, Statistics Lithuania recalculated the HICP time series according to the new index reference period 2015 = 100, and reclassified some of the products according to more detailed COICOP/HICP level 5. The HICP time series based on the new index reference period and the price changes provided on the Official Statistics Portal are non-final and may be revised. They differ, in terms of some COICOP/HICP categories, from the HICPs and price changes provided in the database of Eurostat because Eurostat has recalculated Lithuania's HICP time series using the HICPs which were not reclassified. Currently the HICP time series are coordinated with Eurostat and subsequently the revision of the HICPs and price changes calculated based on the HICP published by Statistics Lithuania and Eurostat will be carried out.

Differences between the HICP and the CPI

Purpose. The HICP is an instrument for measuring inflation in the EU and making international comparisons, as well as for the compilation of the European index of consumer prices (covering 28 EU member states), Monetary Union index of consumer prices (covering 19 EU member states belonging to the euro area: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain), and the European Economic Area index of consumer prices (covering 28 EU member states, Iceland and Norway). The extent to which a country fulfils the price stability criterion established in Article 140 of the Treaty on the Functioning of the European Union is measured taking into consideration the inflation rate calculated based on the HICP.

The CPI is used to measure the inflation rate in the country; it is the key instrument for indexation.

Coverage. The HICP, alongside consumption expenditure incurred by the residents of the country, covers consumption expenditure incurred by non-residents and visitors from abroad within the economic territory of the country. The CPI covers consumption expenditure incurred only by the residents of the country within the economic territory of the country. The HICP does not cover household expenditure on games of chance and financial intermediation services, while the CPI does cover them.

Weights. Due to a different coverage of consumption expenditure, weighting systems used for the HICP and CPI compilation differ. This is the primary factor leading to differences in index values.

Classification. For the calculation of the CPI, the Classification of Individual Consumption by Purpose (COICOP) is used. The Classification of Individual Consumption by Purpose adapted to the needs of HICPs has been adjusted for the calculation of the HICP.

Concepts

Inflation is a long-term increase in the general price level, resulting in a decrease in the purchasing power of money. Inflation is usually calculated based on the consumer price index and expressed in %.

Annual inflation shows the relative change in the average price level in the reporting month and the corresponding month of the previous year.

Average annual inflation shows the relative change in the average price level in the last twelve months and the corresponding previous twelve months.

Harmonized index of consumer prices – a consumer price index compiled according to a methodology harmonised across the European Union.

Consumer price index – a relative indicator reflecting the overall change in prices for consumer goods and services purchased by households to satisfy their consumption needs over a certain period of time.

For more information on the issue, please see the Database of Indicators of Statistics Lithuania and Eurostat's website.