Analytics, Inflation, Lithuania

Annual inflation (May 2012, against May 2011) stood at 2.6% and was by 0.1 percentage points higher than that calculated based on the consumer price index (CPI). 

Average annual inflation calculated based on the HICP

The monthly (May 2012, against April) increase in prices for consumer goods and services calculated based on the HICP amounted to 0.1%. 

The average annual inflation and the monthly change in prices for consumer goods and services calculated based on the HICP tallied with those calculated based on the CPI. 

Table 1. Rates of change in prices for consumer goods and services calculated based on the HICP, May 2012

For the calculation of annual and average annual inflation, monthly and other period’s price changes, the HICPs calculated based on the 2005 index reference period (2005 = 100) accurate to two decimal places are used. Price indices are published accurate to two decimal places, inflation and price changes – to one decimal place. 

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 over the year (May 2012, against May 2011)

Percentage points

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

Differences between the HICP and the CPI

The main differences between the HICP and CPI are as follows: 

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 27 EU member states), Monetary Union index of consumer prices (covering 16 countries: Ireland, Austria, Belgium, Greece, Spain, Italy, Cyprus, Luxembourg, Malta, the Netherlands, France, Portugal, Slovenia, Slovakia, Finland, Germany), and the European Economic Area index of consumer prices (covering 27 EU member states, Iceland and Norway). The CPI is used to measure the inflation rate in the country. It is the key instrument for indexation.  

Coverage. The HICP covers consumption expenditure incurred by the residents of the country, institutional households, non-residents and visitors from abroad within the economic territory of the country. The CPI covers consumption expenditure met only by the residents of the country (exclusive of institutional households) within the economic territory of the country. The HICP does not cover expenditure of households 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 decrease in the purchasing power of a currency unit, which manifests itself in a long-term growth in the general average price level. 

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.