Note at 12:30 on 29 April 2020
A technical mistake was made in updating statistics on sub-indices in the CPI when the statistics were disseminated this morning at 9:00. However; the aggregated CPI was correct as well as the news release below. The mistake resulted in temporary dissemination of wrong statistics on sub-indices in April 2020 in table "Consumer price index, subindices from 2008" (VIS01304.px). This has now been corrected in the web table.
The Consumer Price Index (CPI) based on prices in April 2020 is 477.5 points (May 1988=100), 0.48% higher than in the previous month. The CPI less housing cost is 407.0 points, 0.57% higher than in March 2020.
Prices of food increased by 1.5% (effect on index 0.20%), prices of petrol and diesel decreased by 4.6% (-0.15%) and prices of new car increased by 2.3% (0.12%) from last month.
The CPI is 2.2% higher in April 2020 than in April 2019 and the CPI less housing cost is 1.9% higher than one year ago.
The CPI compiled in the middle of April 2020, 477.5 points, is applicable for indexation purposes in June 2020. The old credit terms index for June 2020 is 9,428 points.
|The Icelandic consumer price index 2019-2020|
|May 1988 = 100||Annualized rates|
|Monthly index||Monthly changes||Latest month||Latest 3 months||Latest 6 months||Latest 12 months|
Percentage changes, not seasonally adjusted
Updated consumption weights
The consumer price index is now published on a new base, March 2020. The rebasing of the index is primarily built on Statistics Iceland’s household expenditure survey 2016–2018. Other sources were utilized where more recent and reliable information was available, such as public registers. Outlet weights for grocery stores changed insignificantly and as a result did not affect the CPI measurement. The rebasing of the index does not in itself have any effect on the CPI results in April. Expenditure shares according to the new and old base in March 2020 can be found in a memorandum here.
This update of consumption weights is a routine part of Statistics Iceland’s annual update of weights. The purpose is to reflect consumer behaviour as well as possible under general conditions. The new base does therefore not take into account the unusual situation affecting Iceland and the rest of the world at present due to the spread of the Covid-19 virus.
The measurement of the CPI in light of the Covid-19 virus
Statistics Iceland has published a website with frequently asked questions and answers on how CPI measurements are conducted in light of the Covid-19 virus.
The measurement and compilation of the CPI in April did pass normally, yet with some effect from the situation which has risen due to the Covid-19 virus and the protection measures taken to prevent further spread. The challenges in measuring prices stem from limited supply as well as limited access and ability for consumers to purchase some goods and services. This is the case for many meeting places and many services with particular infection risks which have had to close down.
Price measurements in the CPI are extensive and conducted in various ways. The process is to collect information each month from stores’ and companies’ websites as well as information from public services. Furthermore; data is collected through telephone interviews and web-forms which are updated and delivered by the companies. Statistics Iceland has been developing and advancing the use of digital solutions in price measurements. One result from this effort is the utilisation of scanner data from supermarkets and discount stores. The goal is to measure properly the monthly prices of all the various products and services which consumers demand according to their preferences as they appear in Statistics Iceland’s Household expenditure survey. Monthly price measurements are between 100 and 150 thousand.
Many web-stores have opened in the last months and miscellaneous stores which have usually focused on inviting customers to their location have now expedited their introduction of websites in order to ease access for their customers during the current situation. In addition many restaurants have started to offer take-away menus and food deliveries as a new service. This has all been beneficial and in some cases replaced price measurements which would have been inaccessible otherwise.
It is however important to note that if specific types of companies have been closed and similar goods or services cannot be bought elsewhere, then it is not possible to measure prices. Now in April, this has for example been the case for services of hair salons, dentists, physio therapists and more. In such cases the price measurement from the previous month is carried forward and used for the current month. This is a satisfactory imputation as no price development has passed the measurement since no transactions have taken place. A new price will be measured when business resumes. The method is one of internationally accepted imputation methods which can be used if a price measurement is not available. Other imputation methods apply price changes of similar goods or services to the item under the assumption that there is a reason to believe that trade was active but the price was missed during price collection.
Statistics Iceland estimates that less than 10% of the CPI weights in April have been measured with imputed prices where price measurements were not possible due to temporary closing of companies or stores because of Covid-19.
Statistics Iceland has been working in cooperation with statistical offices all over Europe, including Eurostat, to apply harmonised imputation methods to consumption items which are in limited supply or inaccessible as the challenges are the same in all the countries.
Statistics Iceland is at all times committed to measure prices as accurately as possible. However, in extraordinary circumstances when certain prices deviate strongly from the norm, special measures are taken. Therefore, sudden jumps in consumer categories, with little or no trading, are not to be expected.