Statistical Service of Cyprus — CYSTAT.

Consumer Price Statistics belongs to the division of the Methodology, Dissemination, Prices and ICT surveys. 

Statistical Service of Cyprus

CY-1444

Nicosia

Cyprus

The harmonised index of consumer prices (HICP) is a consumer price index (CPI) that is calculated according to a harmonised approach. It measures the change over time of the prices of consumer goods and services acquired by households (inflation).

Due to the common methodology, the HICPs of the countries and European aggregates can be directly compared.

European classification of individual consumption according to purpose (ECOICOP)

The HICP covers the final monetary consumption expenditure of the household sector.

The main statistical variables are price indices.

The basic unit of statistical observation are prices for consumer products.

3.6.1. Statistical target population

The target statistical universe is the 'household final monetary consumption expenditure' (HFMCE) on the economic territory of the country by both resident and non-resident households. The household sector to which the definition refers, includes all individuals or groups of individuals irrespective of, in particular, the type of area in which they live, their position in the income distribution and their nationality or residence status. These definitions follow the national accounts concepts in the European System of Accounts.

3.6.2. Coverage error population

With reference to the weights of the HICP, population coverage is being satisfied, since the data source is the National Accounts (NA) data.

3.7.1. Geographical coverage

The HICP refers to the economic territory of a country as referred to in paragraph 2.05 of Annex A to ESA 2010, with the exception that the extraterritorial enclaves situated within the boundaries of a Member State or a country are included and the territorial enclaves situated in the rest of the world are excluded.

3.7.2. Coverage error regions

Following the Turkish invasion in Cyprus in July 1974 and the subsequent occupation of nearly 40% of its territory, the calculations of HICP refers to the government controlled areas of the Republic of Cyprus and this is in accordance with ESA 2010.

The NA figures follow the definitions laid down in European System of Accounts (ESA) and thus there are no parts of the government controlled areas of Cyprus that are excluded from the index.

3.8.1. Start of time series

The HICP series started in January 1997.

3.8.2. Start of time series - national specifics

HICP time series starts from January 1996.

2015=100

The following units are used:

• Index point
• Percentage change on the same period of the previous year (rates);
• Percentage change on the previous period (rates);
• Percentage share of the total (weights).

HICP is a monthly statistics.

Harmonised Indices of Consumer Prices (HICPs) are harmonised inflation figures required under the Treaty on the Functioning of the European Union. Regulation (EU) 2016/792 of the European Parliament and the Council of 11 May 2016 (OJ L 135) sets the legal basis for establishing a harmonised methodology for the compilation of the HICP and the HICP-CT.

This regulation is implemented by Commission Regulation (EU) 2020/1148 of 31 July 2020.

Further documentation, can be found in Eurostat’s website - HICP dedicated section, namely recommendations on specific topics, under the methodology page, and guidelines, under the quality page.

Not available.

The data collected and processed by officials of CYSTAT and Eurostat for the production of statistics is considered confidential as long as it allows the direct or indirect identification of statistical units (e.g. items and outlets) and discloses personal data. Thus, item descriptions, their corresponding prices and weights are considered confidential. 

Official statistics are released in accordance to all confidentiality provisions of the following:

• National Statistics Law No. 15(I) of 2000 (especially Article 13 on statistical confidentiality).
• Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics and its later amendments (especially Chapter 5 on statistical confidentiality).
• European Statistics Code of Practice (especially Principle 5 on statistical confidentiality).
• CYSTAT's Code of Practice for the Collection, Publication and Storage of Statistical Data.

In particular, according to article 13.5(a) of the Statistics Law 2000, the officials working for CYSTAT have the obligation not to disclose information which they have received during the conduct of a survey. This obligation continues to exist after the termination of their professional relationship with the service.  Furthermore, the article 16 of the Statistics Law refers to penalties for any wilful breaches of statistical confidentiality.

The treatment of confidential data is regulated by CYSTAT's Code of Practice for the Collection, Publication and Storage of Statistical Data.

• Code of Practice for the Collection, Publication and Storage of Statistical Data:

http://www.mof.gov.cy/mof/cystat/statistics.nsf/dmlquality_en/dmlquality_en?OpenDocument

CYSTAT has also created the Confidentiality Committee which is responsible for dealing with any user’s request for confidential data. The Confidentiality Committee of CYSTAT may give access to confidential data which only allow the indirect identification of the statistical units to researchers carrying out statistical analyses for scientific purposes.

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on Eurostat's website (see point 10 - 'Accessibility and clarity') respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Protocol on impartial access to Eurostat data for users.

The HICP is released according to Eurostat’s Release calendar.

The calendar is publically available and published at the end of the year for the full following year.

Link to CYSTAT’s release calendar:

https://www.cystat.gov.cy/en/AnnouncementList

The Dissemination and Pricing Policy of the Statistical Service of Cyprus can be found in the following link 

https://www.cystat.gov.cy/en/StaticPage?id=1064

CYSTAT΄s main channel for dissemination of statistics is the official website of the institution, which offers the same conditions to everyone and is updated at the same time every working day (12:00 noon). In addition to the annual release calendar, registered users are informed of the various statistical releases through the “Alert” service provided by CYSTAT.

Privileged pre-released access (of no more than 1 day in advance) has been granted to a few selected users for specific statistics. These are specified in the Dissemination Policy (section 2.3).

Monthly

1.  CYSTAT prepares and disseminates a press release for HICP  on its website on the same date as Eurostat’s press release for HICP, along with an update of the following key figures:

• Evolution of Index by Month (for the 12 main categories)
• Comparison with corresponding month of previous year (for the 12 main categories)
• Comparison with corresponding period of previous year (for the 12 main categories)

Also, the same press release is given to the media (through PIO-Press Information Office) and to the Official Government Gazette for publication.

      2.The HICP rates are published in one decimal point whereas the HICP level indices are in two decimal points.

      3. All the press releases and the corresponding excel files of HICP are available in English as well.

CYSTAT prepares a monthly press release and relevant tables that include the HICP data. These are disseminated according to the pre-announced dates of the HICP publication.

All data concerning HICP is available on the CYSTAT database (CYSTAT-DB).

In addition, relevant data can be found under the statistical theme Economy /Prices Indices.

All data concerning HICP is available on the website under the statistical theme Economy /Prices Indices 

Link: https://www.cystat.gov.cy/en/SubthemeStatistics?s=47

Statistical micro-data from CYSTAT’s surveys are accessible for research purposes only and under strict provisions as described below.

Under the provisions of the Statistics Law, CYSTAT may release microdata for the sole use of scientific research. Applicants have to submit the request form 'APPLICATION FOR DATA FOR RESEARCH PURPOSES' giving thorough information on the project for which micro-data are needed.

The application is evaluated by CYSTAT’s Confidentiality Committee and if the application is approved, a charge is fixed according to the volume and time consumed for preparation of the data. Micro-data may then be released after an anonymisation process which ensures no direct identification of the statistical units but, at the same time, ensures usability of the data. 

The publication of the HICP is also made with an announcement to the media and in the Official Government Gazette.

The HICP Methodological Manual provides the reference methodology for the production of HICP. (https://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-GQ-17-015)

10.6.1. Documentation on methodology - national specifics

On CYSTAT's website, a methodological page Harmonised Index of Consumer Prices (cystat.gov.cy) is published in both Greek and English language.

Currently, the HICP inventory is not available to the users.

The quality documentation available is the Inventory/metadata of HICP, which is updated annually and the Quality Policy which is available on the website under the theme Quality.

https://ec.europa.eu/eurostat/cache/metadata/EN/prc_hicp_esmshi_cy.htm

The quality of statistics in CYSTAT is managed in the framework of the European Statistics Code of Practice which sets the standards for developing, producing and disseminating European Statistics as well as the ESS Quality Assurance Framework (QAF). CYSTAT endorses the Quality Declaration of the European Statistical System. In addition, CYSTAT is guided by the requirements provided for in Article 12 of the Statistics Law No. 15(I) of 2000 as well as Article 12 of Regulation (EC) No 223/2009 on European statistics, which sets out the quality criteria to be applied in the development, production and dissemination of European statistics.

11.1.1. Quality management - Compliance Monitoring

Compliance Monitoring

11.1.2. Quality assurance - national specifics

The quality of statistics in CYSTAT is managed in the framework of the European Statistics Code of Practice which sets the standards for developing, producing and disseminating European Statistics as well as the ESS Quality Assurance Framework (QAF). CYSTAT endorses the Quality Declaration of the European Statistical System. In addition, CYSTAT is guided by the requirements provided for in Article 12 of the Statistics Law No. 15(I) of 2000 as well as Article 12 of Regulation (EC) No 223/2009 on European statistics, which sets out the quality criteria to be applied in the development, production and dissemination of European statistics.

CYSTAT has developed and introduced the HICP’s concepts and methodology according to international standards, by implementing Eurostat’s regulations along with exchanging consumer price statistics experience with other EU Member States. The price collectors are properly guided in order to apply and implement the standards of EU regulations during the collection and also the staff responsible for the calculation of the index is well trained and is in continuous communication with Eurostat for dealing with problems or queries that may arise during the calculation process.

A number of controls are carried out during the HICP compilation procedure, in order to ensure the quality of the collected data and the produced indices, to evaluate the completeness and accuracy of the information and the compliance of the concerned sub-indices with the HICP comparability and quality requirements.

 In short description,

• general guidelines along with specified practical examples concerning price collection are available to the price collectors, in order to ensure a uniform policy for dealing with the same problems,
• price collectors are instructed to record all data (price, product/service description, store, unit) to the network at the end of each week and thus significant information is available for a first assessment (the data are entered  in developed excel files),
• evaluation is carried out comparing data to the previous month,
• staff meetings take place on a frequent basis where price issues are discussed in detail, securing a common treatment of the problems.

11.2.1. Compliance monitoring - last report and main results

The available compliance and follow-up reports can be found under ‘Compliance Monitoring’ on the webpage: Quality - Harmonised Indices of Consumer Prices (HICP) - Eurostat (europa.eu).

Direct link to latest report (December 2022).

11.2.2. Quality assessment - national specifics

CYSTAT carries out a User Satisfaction survey every year and its results are processed and assessed in general. For HICP/CPI an overall quality assessment is carried out by annually updating the Inventory. Furthermore, the following aspects of quality are also assessed:

Relevance: HICP/CPI outputs are presented in such detail in order to satisfy users’ needs; also the relevance of the HICP/CPI indices has been further enhanced by the dissemination of the monthly HICP press release.

Accuracy and Reliability: HICP outputs accurately and reliably portray reality since respective EU regulations and recommendations were put in force on time.

Timeliness and Punctuality: HICP/CPI outputs are released in a timely and punctual manner and satisfy Eurostat’s deadlines and the preannounced calendar on CYSTAT’s website.

Coherence and Comparability: HICP/CPI’s compilation method, base year, the weights’ source and the collection procedure are consistent.

Accessibility and Clarity: HICP/CPI outputs are presented in a clear and understandable form and are mainly released on CYSTAT’s website, Cyprus gazette and with a short announcement to the PIO.  In addition, supporting metadata files and notes are available on the website. The general results from the User Satisfaction survey can be found at User Satisfaction Survey (cystat.gov.cy).

In particular, for HICP/CPI all the different levels of collection, editing, processing and calculation are systematically assessed in order to identify and adopt new procedures that aim in improving the index compilation.  In particular, a weakness identified at the collection procedure is that prices are collected manually and recorded on special forms. This procedure is due to be improved by introducing suitable electronic devices for the price collection and the registration of the product characteristics. The piloting introduction of the electronic devices is planned first to take place for PPP purposes and then be adopted for HICP/CPI purposes.

In addition to being a general measure of inflation, the HICP is also used in the areas of:

• wages, social benefit and contract indexation;
• economic forecasting and analysis;
• measuring specific price trends;
• accounting purposes and deflating other series;
• inflation targeting by central banks;
• cross-country economic comparisons.

The euro area (evolving composition) index is used by the European Central Bank (ECB) as the main indicator for monetary policy management. The ECB and the European Commission's Directorate-General for Economic and Financial Affairs (DG ECFIN) use the HICP for assessing price stability and price convergence required for entry into European Monetary Union.

Other users include: National Central Banks, financial institutions, economic analysts, the media and the public at large.

12.1.1. User Needs - national specifics

The main users of the HICP/CPI indices, besides Eurostat, are the Cyprus' Central Bank, the Ministry of Finance and other sections of CYSTAT such as National Accounts, who require specific statistical outputs and calculations based on HICP data. In particular, CYSTAT calculates the core inflation especially for the Cyprus' Central Bank ,which is the CPI excluding a)Fresh fruits, vegetables and potatoes, b)Electricity, gas and fuels c)Value Added Tax and d)Excise tax. Additionally, every year the Ministry of Finance announces the cost of living allowance (wage indexation) which is based on CPI index. Moreover, CPI indices are used in determining the economic and monetary policy of the country (interest-rates, productivity, GDP, etc.), in the collective agreements and for the adaptation of contracts (projects, rents etc.).

 Also, the public media and economic analysts are interested in the HICP as a general measure of inflation and for comparability reasons with the other EU countries. The general index and the level of inflation as measured by the HICP, is published every month in the newspapers and announced in the main newscast of some tv-stations.

User satisfaction is monitored on a yearly basis through a user satisfaction survey  which is conducted on line, on the website of CYSTAT.

The questionnaire measures users satisfaction from all the services and statistical outputs provided by the website of CYSTAT and does not refer to HICP users exclusively.

The general results from the latest User Satisfaction survey can be found in the webpage: User Satisfaction Survey (cystat.gov.cy).

There exists the Technical Commission of CPI (Board of Users) which consists of members from: CYSTAT, the ministries of Finance and Energy, Commerce, Industry and Tourism and from the trade Unions of Cyprus. The Technical Commission meets whenever there is an important development concerning the CPI (such as rebasing and change of weights) mainly to inform the members and to exchange views.

The most recent Commission meeting took place in December 2017, in order to be informed for the updating of the products and the weights of CPI. 

HICPs and HICP-CTs 5-digit level indices are produced and published.

Error can arise due to the various corrections and adjustments that are made to collected prices. However, effort is taken to continuously review the methods used and ensure the most appropriate methods are applied.

Clerical errors might also occur when prices are being recorded by the price interviewers. However, the developed excel files used by the price collectors for data entry, include automatic tolerance checks and alert the officers of any suspicious values. In addition, the data is subject to further verification and analysis. When unusual prices or price movements are detected, extra feedback on prices is requested to obtain additional explanatory information. Nevertheless, the size of any statistical error or bias associated with the HICP is considered to be small enough to be within the range of tolerance of most users.

a. The HICPs are statistical estimates that are subject to sampling errors because they are based on observing and exploiting data referring to a sample of consumer prices and household expenditures, and not the complete universe of all prices/expenditures. The sampling errors are induced by the sample design thus can be summarized as follows:

• errors in determining a representative sample of outlets
• errors in determining a representative sample of items to be priced in each ECOICOP sub-class (HBS main source)
• errors in the estimate of quality adjustment in the case of an item replacement
• error in compiling HICP weights, since NA data are based on estimates and HBS is a sample survey that is subject to sampling error

For determining a representative sample of outlets quota sampling is applied with consideration to the region and the outlet type for each product. In particular, at first the sample size is determined (3 different outlets) for each product in the 4 regions (Nicosia, Larnaca, Limassol, Paphos). Then, in-cooperation with the local price collectors, a representative outlet sample is defined based on their knowledge of which outlets are frequently visited (purposive sampling) and with consideration to the diversity in the prices of specific products. The Business Register and Wholesale and Retail survey are also exploited at this stage as a guide. This method is found to be more cost and time effective compared to probability sampling since the market in Cyprus is small and includes a lot of chain stores

 For choosing representative products the procedure includes several stages. Where available, the detailed expenditure data at product level as provided by HBS is used (probability proportional to size). Then, in-cooperation with the price collectors, the most popular items are defined, indicating a variety of certain brands, modes that are most / well sold (cut-off sampling) and also giving a range in certain cases for package sizes/type. The sample size of the products to be monitored is defined for each ECOICOP sub-group separately with consideration to the weight of the group and to the vulnerability to price changes of the products within the group. Additionally, information regarding the products with high volume of sales sold from two large supermarkets was also exploited in order to define the most popular products. The information, although was confined and concerned specific items was valuable. 

b.The probability sampling is only applied in the case when the HBS data is currently available (no more than 2 years).

c. Non-probability sampling methods are used since are found to be more cost and time effective compared to using probability sampling because the market in Cyprus is small and includes a lot of chain stores.

The non-probability sampling errors are reduced by selecting a large and representative sample of consumer prices from a stratified sample, given resource constraints.  Also, the sample of outlets represents the entire economic territory of the island since 2005 as all different kinds of outlets are monitored in each district. Added to that, CYSTAT has increased the selected prices per item to 3 since 2002 and from 2011 and onwards has added a fourth retailer/price for specific products in Nicosia, the capital of Cyprus (biggest regional weight) which has significant weight in the index compilation. Also, in 2018 CYSTAT evaluated and proceeded with the entry of a 4^th retailer in Limassol.

Cut-off sampling is used in the following cases:

• Location sampling
• Outlet sampling: at the first stage of the selection quota sampling is used satisfying region and outlet type variables. Then cut-off sampling is applied with consideration to the popularity, from consumer perspective, of the outlets and the diversity of the prices. Both small and large businesses (i.e with over 10 persons employed- proxy variable) are included in the sample. The sample bias for large outlets is estimated by using the Business register at 70%; The bias for small businesses cannot be estimated.
• Product sampling: The most sold product offer over a certain period the criterion applied for the sample selection and a good sample frame to start is the HBS. The sample bias from comparing HBS products and the ones finally included on the HICP sample is estimated to be approximately 14% (coverage of products 802/928=86%).

For the HICP non-sampling errors are not quantified. CYSTAT tries to reduce non-sampling errors through continuous methodological improvements and survey process improvements. In particular,

• Coding and typing errors  have been significantly reduced since from 2014 and onwards prices and product/services characteristics are entered electronically and are accessible to the central office at any time of the collection period,
• The personnel working at the prices collection stage is very well experience and properly guided (written instructions are provided to them with practical examples) in order to be able to deal with prices issues
• The joined meetings with the price collectors are very helpful for applying a consistent policy across the same problems,
• CYSTAT applies all Eurostat recommendations on the treatment of specific ECOICOP subcategories the sooner they are finalised.

The full set of HICPs is published each month according to Eurostat’s Release calendar, usually between 15 and 18 days after the end of the reference month.

Each year, the January release is published at the end of February to allow for the annual update of the weights, both of individual product groups and the relative country weights of Members States in the country group aggregates.

The euro area flash estimate is published on the last working day of the reference month or shortly after that.

Since the March 1997, launch of the HICP release, the HICP for the country groups aggregates has always been published on the dates announced in Eurostat’s Release calendar.

HICPs across Member States aim to be comparable. Any differences at all levels of detail should only reflect differences in price changes or expenditure patterns.

To this end, concepts and methods have been harmonised by means of legislation. HICPs that deviate from these concepts and methods are deemed comparable if they result in an index that is estimated to differ systematically by less than or equal to 0.1 percentage points on average over one year against the previous year (Article 4 of Council and Parliament Regulation (EU) 2016/792).

HICP data are comparable and no revisions have been made. HICP’s main improvements are listed below:

2006 - Change of temporal coverage. The price collection in the HICP was extended to 3 weeks every month and for energy products and fruit and vegetables the collection was set to be carried out every week.

2011 - The method for the treatment of seasonal products in HICP (330/2009) changed the way clothing prices are treated.
2012 - The method for calculating the weights changed due to the implementation of regulation 1114/2010.  The impact was calculated and published on the website of CYSTAT every month throughout 2012.

2016 - The method for the treatment of airfares was brought into line with Eurostat guidelines.

2016 - The base year of the index changed to 2015=100 and ECOICOP classification was adopted.

2018 - The sample has been reviewed based on the latest HBS data (2015/2016).

2021 - The method for the treatment of fruits and vegetables in HICP was brought into line with Eurostat's Regulation (330/2009, repealed and replaced by Commission Implementing Regulation (EU) 1148/2020).

2021 - For the calculation of the weights of HICP in 2021, except from the National Accounts data, more sources were exploited following Eurostat's guidelines, in order to capture the impact of the covid crisis to the Household Final Monetary Consumption Expenditure.

Due to methodological changes, break in the series occurred in 2011, 2012 and 2016. More specifically, from the change on the method for the treatment is seasonal products in 2011 the index affected was the ECOICOP category 03 'Clothing and Footwear'. The methodological change of 2012 affected all the HICP indices, while in 2016 the change of the method for the treatment of airfares affected subcategory 07332. Finally, the change in 2021 affected subcategories 01161 Fresh fruits and 01171 Fresh vegetables.

• Both CPI and HICP are Laspeyres-type indices that measure month-to-month movements in prices.  The HICP is obtained by annually chain-linking 13-month (December to December) indices. The CPI is an annual chained index linked to the prices of the previous month. Both CPI and HICP are based to 2015=100. Also, the weights of HICP are reviewed annually (every January) and are price updated to the previous December whereas the weights of CPI are revised based on the latest HBS data, which is carried out every 5 years. Additionally, up to 2011, the computation of the weights of both indices was mainly based on the data available by the Household Budget Survey. However, implementing the Commission Regulation (EC) No 1114/2010, as from January 2012 and onwards, the weights of the HICP are mainly based on National Accounts data (Table24).
• HICP covers all households' expenditures taking place within the economy territory of the country, whether those households actually live in the country or whether they are merely visiting the country (tourists) and covers institutional households as well.  On the other hand, for CPI weighting purposes only consumption expenditures by resident households are taken into account.
• The sample of products monitored for HICP purposes is mostly the same with the sample for CPI purposes. The only difference is in the coverage of hotel prices where for HICP purposes more hotel prices are monitored (since the weight of ECOICOP 11.2 is larger for HICP compared to CPI). Also hotel prices from Famagusta are included only in the HICP sample. 
• There are some differences in the treatment of the following product groups in HICP compared to CPI: Fruits, Vegetables, Clothing and Footwear. There are no further differences between CPI and HICP.

The HICPs are internally coherent. Higher level aggregations are derived from detailed indices according to well-defined procedures.

Not available

The HICP series, including back data, is revisable under the terms set in Articles 17-20 of Commission Implementing Regulation (EU) 2020/1148.

17.1.1. Data revision - policy - national specifics

The revision policy of the CPI/HICP is in accordance with the general data revision policy of CYSTAT and Eurostat. The general policy  is published on CYSTAT’s website, on the webpage: Revision Policy (cystat.gov.cy)

CYSTAT also publishes a list of scheduled revisions (regular or major), at the following link: List_Scheduled_Revisions-EN-190523.pdf (cystat.gov.cy)

 The main reasons for revisions of CPI/HICP could be:

-          Due to mistakes provided that corrections should be released immediately without waiting for scheduled revisions and should be accompanied by appropriate explanations

-          The introduction of new information (planned revision)

-          A change in methodology (given that the impact of the change assessed to be significant as described in HICP Manual - planned revision)

-          The finalisation of provisional figures (planned revision)

In particular, CYSTAT has 

-          changed the classification system (e.g COICOP to ECOICOP)

-          updated the base year and the weights of the index series.

In the case of the adoption of the ECOICOP, starting from January 2016, the CPI indices were reclassified and published from 2010 and onwards.

Nevertheless, CYSTAT has never revised HICPs.

18.1.1. Weights

The weights compilation at elementary aggregate level is based on the expenditures of private households, the expenditures of foreign visitors and the expenditures of individuals living in institutions, while the expenditures of residents in a foreign country are excluded. The weights at 5-digit level are price updated, every January to the previous December. The usual sources of the expenditure data used for the calculation of the weights of HICP items are the NA and HBS data. The NA figures are estimates of the households’ consumption expenditures two years old and give information up to 5-digit level, and HBS provides information, no more than 7 years old, about the households' consumption expenditures and gives information at item level.

The weight of HICP of year t are based on NA data of year t-2. Typically, the first national accounts estimates of household consumption expenditure by ECOICOP for the year t-1 only become available in September t year, thus, preliminary national accounts data of t-2 and other sources are employed. Also, the national accounts data at level of consumption expenditure, for the three quarters of the year t-1 are available and exploited. 

18.1.1.1. Compilation at elementary aggregate level

The weights compilation at elementary aggregate level is based on the expenditures of private households, the expenditures of foreign visitors and the expenditures of individuals living in institutions, while the expenditures of residents in a foreign country are excluded. The weights at 5-digit level are price updated, every January to the previous December. The usual sources of the expenditure data used for the calculation of the weights of HICP items are the NA and HBS data. The NA figures are estimates of the households’ consumption expenditures two years old and give information up to 5-digit level, and HBS provides information, no more than 7 years old, about the households' consumption expenditures and gives information at item level.

The lowest level of aggregation that explicit weights are usually introduced is at ECOICOP 5-digit level and is mainly based on NA figures. Nevertheless, additional data from the HBS (if no more than 2 years old) and/or results of other surveys (such as data on telephony and internet published by OCECPR, annual registrations of new and second-hand cars published by CYSTAT and the volume of imports of technology products also published by CYSTAT and data from public utilities) are exploited for estimating the weights at the 5-digit or item level. The weights at 5-digit level are reviewed and updated every January mainly based on NA figures but since the NA data provide information only for ECOICOP 5-digit level and above, additional information from the latest HBS is also used for the estimation of products weights. In particular the ratio of the item weights within each level is primarily derived from HBS data

In cases where only HBS data is currently available (less than 2-years old the figures)used (such as in 04.4.1 Water supply, 04.4.2 Refuse collection and 04.4.3 Sewage collection) the figures are price updated to the last December in order to be compatible with the European Parliament and of the Council Regulation (EU) 2016/792.

For the years between HBS, a small annual survey is carried out in order to collect data from the responsible boards that provide the water/refuse and sewage services. The collected data cover only the expenditures in the urban areas and thus they are adjusted to the population based on the latest’s Census results.

The two main sources for the compilation of the weights are the NA and HBS figures. Nevertheless, other sources are also exploited in order to keep the weights reliable and as up-to-date as possible. In particular, published data regarding new products and market shares of category Telephone and Telefax equipment and Telephone and telefax services (08) is exploited from the Office of the Commissioner of Electronic Communications and Postal Regulation Cyprus (OCECPR) and the Cyprus Telecommunications Authority (CYTA). The total expenditures for ECOICOP 08 is used from NA (or if HBS data is no more than two years old is also exploited). Extra information from OCECPR and CYTA is used in order to define the basket sample of the services to be monitor for pricing reasons and as well as to weight the collected prices from the various companies according to their market share. For example, for Mobile Service:

• the percentage of pre-paid and contract users is published from OCECPR
• the market shares, for pre-paid and contract users, of all the companies that provide mobile telephony is published from OCECPR
• the total income per service is provided by CYTA – which owns the biggest market share – in order to weight national calls, international calls, sms and roaming prices

Additional sources:

• expenditures for the electricity used by households are given on an annual basis by the Electricity Authority of Cyprus
• data provided by other sectors of CYSTAT regarding car registrations and the volume of imports of technology products are assessed and used for the weight compilation. In particular, the car registrations for personal transport are used in order to select the “strata” (by brand and engine size) and the weight of each strata for new and second-hand cars respectively.  
• Data for the petroleum products are also collected from one of the main providers in Cyprus. The data refer to the sales of diesel and petrol that were distributed through service stations. This information is crosschecked with NA or HBS data (currently available no more than t-2 old).

Generally, the item weights are annually reviewed and in the cases where the actual expenditures of the item can be collected (e.g electricity, diesel for central heating) are used.

In order to create more homogeneous entities, regional weights based on population census are applied. For each city, the fluctuations of the product prices are weighted according to their population. In particular, the following regional weights are currently used for the compilation of the index: Nicosia 42%, Limassol 30%, Larnaca 18% and Paphos 10%.

No outlet weights are applied even though prices are collected from a variety of outlets and outlet types. The products’ weights are mainly based on HBS information.

18.1.1.2. Compilation of sub-index weights

The weight of HICP of year t are based on NA data of year t-2. Typically, the first national accounts estimates of household consumption expenditure by ECOICOP for the year t-1 only become available in September t, which was too late as the HICP weights need to be submitted to Eurostat in February t. Thus, preliminary national accounts data of t-2 and other sources needed to be employed.

Since the HICP of year t is defined as a Laspeyres-type index where the weights refer to t-1 and the price reference period corresponds to December t-1, the expenditure shares for t-2 for each sub-index, needed to be multiplied by the difference between the corresponding HICP sub-index for the December of t-2 and December t-1, following normal procedure. In the case where the expenditure shares were referring to year t-1 then these were multiplied by the difference between the corresponding HICP sub-index for the average of year of t-1 and December t-1.

The main data source was the most recent version of t-2 expenditures -national accounts data -including the ECOICOP breakdown which was used to estimate the total of t-1 HFMCE. For certain segments where no data change assumed in the share in HFMCE, then price adjustment applied by using the change in HICP between  t-2 and t-1.

For some others segments their corresponding figures were price updated by multiplying by the difference between the corresponding HICP subindex for the average of t-1 and December t-1, following normal procedure. For these segments either other sources were exploited that refer to t-1 or the latest national accounts data by durability were used. The latter, referred to Q1-Q3 t-1 and therefore the Q4 t-1 was estimated by applying the change in consumption between Q1-Q3 of t-2 and Q1-Q3 of t-1 to Q4 of t-2.

The following categories are those with the biggest changes in weights compared to the previous year:

• 045. Electricity tariffs have increased significantly in the last year.
• 091. A lot of shortages were observed in the market, which justify the decrease-reduce imports.
• 112. The decrease is explained due to correctness of the previous years percentages as a result of covid crisis

The fourth quarter of t-1 was estimated by applying the change in consumption between Q1-Q3 of t-2 and Q1-Q3 of t-1 to Q4 of t-2 by summing the results of applying this assumption at a more detailed level.

18.1.1.3. Compilation of sub-index weights

In general, the reference period of the data used for the calculation of HICP sub-index weights (ECOICOP sub-classes and higher) is the year t-2 (NA figures). Whereas, for the estimation of the weights at a more detailed level, HBS figures (latest data in 2015/16) were also exploited.

18.1.1.4. Weights – plausibility checking

For the annual updating of the weights, the plausibility of the data from both the HBS and NA is verified using market data obtained in advance. The final weights of goods and services are compared with the weights for the previous year, price trends of items and market data. 

18.1.1.5. Price updating

18.1.1.6. Compilation of total household final monetary consumption expenditure

The estimate for the total of 2023 Household Final Monetary Consumption Expenditure (HFMCE) was based on the available national accounts data and data from the central bank of Cyprus. The estimates based on national accounts data were adjusted for the differences between HFMCE and the total household consumption at domestic concept in the national accounts.

The fourth quarter of t-1 was estimated by applying the change in consumption between Q1-Q3 of 2022 and Q1-Q3 of 2020 to Q4 of 2022 by summing the results of applying this assumption at a more detailed level.

18.1.2. Prices

The price data is mainly based on survey that includes personal visits to the outlet, telephone interviews and online price monitoring. However, for specific categories other data sources are exploited:

• Pharmaceutical products and public/government medical care are monitored through list prices published by the Pharmaceutical Services of the Ministry of Health
• Electricity, Gas, Petroleum Products, Water supply, Refuse collection, Sewerage collection and Car Licences are monitored from administrative data sources,
• New Cars from list prices.

18.1.2.1. Data Source - overview  

18.1.2.2. Scanner data - general information

Not applicable, it is not done in Cyprus.

18.1.2.3. Web scraping - general information

Not applicable, it is not done in Cyprus.

18.1.3. Sampling

18.1.3.1. Sampling design: locations for survey

a. The sample of prices is geographically stratified according to the respective population of each region as found from Census of 2011.

b. Particularly, full price collection takes place in Nicosia, Limassol, Larnaca and Paphos whereas in the region of Famagusta only hotel prices are collected.

18.1.3.2. Sampling design: outlets

a. The outlets are chosen to represent the structure of retail trade as closely as possible. Therefore, the outlet sample is mainly drawn by using quota sampling based on their sales in order to represent effectively the branches of shops from which the households make their purchases. The following requirements are necessary for selecting outlets for CPI/HICP purposes:

• to reflect the consumption preference of households
• to have a big volume of sales
• to be easily accessible (urban region)
• to offer items whose prices can be recorded on a continuous basis.

 b. In the sample are included several types of outlets such as supermarkets, different departments or specialized stores, enterprises, kiosks and mini markets. Also, market stalls and petrol stations are included in the outlets sample.

Specifically, the prices of food and beverages are primarily recorded from supermarkets and the prices of tobacco from kiosks and mini markets. With reference to the clothing, footwear, furniture and household equipment, these are monitored from department stores or specialized stores.  Moreover, the prices of electricity, water, sewerage collection, telephone and internet services are priced from publicly owned enterprises and private companies. Additionally, market stalls are also included for recording the prices of fruits and vegetables and petrol stations for the observation of lubricants, gas, car wash and certain car accessories.

The share of the above outlets types can be estimated from the output of Wholesale and Retail Trade Survey conducted by CYSTAT every year. The latest published results refer to the index based on year 2015 (2015=100) and covers all activities classified under sector G of the European Union Classification NACE (Rev. 2). This classification covers division 47 (retail trade, except of motor vehicles and motorcycles).

c. Internet purchases are monitored through information from a major service provider of cards for payments of transactions in Cyprus. Specifically, since 2020 – and after the COVID-19 restriction measures – the online activity has significantly increased.

   HICP has adopted the new consumption pattern and thus online shopping is represented in the sample.

Specific products from various ECOICOP codes are covered via online price monitoring:

• Restaurant menus available on line for either dine-in or take away or delivery (11111)
• Online toy stores (0931)
• Eshop of furniture store (0511)
• Eshop of electrical appliances (0531)
• Eshop of technology products (082+091)
• Air tickets (0733)

The online price monitoring was mainly introduced in the HICP since 2020.

18.1.3.3. Sampling design: newly significant goods and services

a. New goods and services are mostly identified by the price collectors since are responsible to closely observe the market and identify new products that are introduced to the households’ consumption behaviour. Moreover, the officers of the central office exploit all available information gathered from NA, HBS data and the price collectors in order to measure the significance level of new products. Usually, newly significant products are added to the sample, if their weight accounts more than one part in a thousand of the total expenditure covered by the CPI/HICP, at the base year revision, where the target sample is reviewed overall. Nonetheless, an annual review of the basket is carried out where a new product may be introduced as representative and it replaces an obsolete item (e.g. new model of a car).

b. In 2018, an overall review of the basket took place. The new 'shopping basket' includes 805 goods and services compared to 783 that were included in the previous one. The 80 items out of the 805 are new additions to the basket. It is clarified that many of the "new items" are not actually 'new' to the market but they have now been included in the basket because of the significant share that have now gained in the total household expenditure. In addition, for specific categories whose weight has been significantly increased (e.g. 01 Food and non-alcoholic beverages), an expansion of their representative items occurred in order to have a better and more representative coverage. In general, there is an increase in households' healthy consumer habits and a significant reduction in products that traditionally considered as luxury items. For example, oats, muesli, coconut milk and dark chocolate are some of the new items added to the basket.

Price data is collected every month.

18.3.1. Price collection surveys

For the CPI/HICP compilation prices are mostly collected either by personal visits to the outlets or by telephone interviews. Collection via Internet and official tariffs are also being used. The collection via paper questionnaires/tables is not used.

The price collection takes place in the four largest regions, namely Nicosia (central), Limassol, Larnaca and Paphos. The collection is implemented by experienced price collectors who have been working for the Prices sector for several years. In general, three price quotations are collected per product except in Nicosia where for certain products four price quotations are collected. In 2018, CYSTAT also added a fourth retailer for some products in Limassol as well.

The communication between price collectors and the central office is on a daily basis and the various queries are discussed and clarified in short time period. All price collectors attend joint meetings with the management of the Prices section that are held on a frequent basis where price issues are discussed in detail and thus a common treatment is applied. The regional offices are mainly responsible for the collection of prices whereas the central office is responsible for monitoring collection procedures and for producing CPI and HICP. 

The prices for the Water Supply, Sewerage collection, Electricity, Pharmaceutical products, Telephone, Internet services and Financial services are collected centrally.

Price collectors working for CPI/HICP purposes may be either permanent or temporary staff. At the moment, 9 price collectors are employed two of which are casual staff.

New price collectors are given a short training from the staff already working in price collection regarding the methods they have to use.

Price collectors are the first who have information about the number of missing prices per month and are responsible for the choice of a replacement. However, the timing of the entrance of a replacement into the index procedure is done with the agreement of the central office.

In general, the issues of missing prices are presented by price collectors to the staff of the central office, where the missing values are evaluated whether they refer to prices observed on a monthly basis or less frequently and whether they are missing due to seasonality or any other causes. For missing values of monthly observed items that are not seasonal, the price collectors present their replacements together with the prices for both the previous and the current month (for the items that tent to be frequently replaced a parallel price collection is carried out as of June 2018, especially for electronic devices, monitoring the newly entered products) and the central office validates them. In the cases where the replacement has different specifications, the price is quality adjusted (e.g. in the cases of second-hand vehicles or for fast evolving technology products).  

Additionally, new goods and services are mostly identified by the price collectors since are responsible to closely observe the market and identify obsolete and new products. Also, the central office observes the market centrally and exploits all available information gathered from NA, HBS data and the price collectors in order to measure the significance level for new products.

Finally, the outlets are selected both centrally and regionally. The Central Office along with the knowledge/experience of the price collectors is mainly responsible for defining the outlets sample.

18.3.2. Timing of price collection

The price collection period lasts 3 working weeks (often from the 4th until the 24th of each month), in order to have sufficient time to collect comparable prices from a representative target sample of outlets. The price of each product is collected once per month except in the case of products whose prices tend to volatile more or less significantly during the month.

a. Prices and other significant related info (such as product/service description, store and unit) are recorded in the developed excel files at real time with the price collection period and the information is immediately available to the Central Office for validation through various assessments.

b. In order to test the correctness and plausibility of outcomes, the officers of the Central Office compare the indices of the elementary aggregates of the current month to the indices of the previous month and the corresponding indices of the previous year. When significant changes are detected, they are investigated in order to ensure that these changes were expected and justified.

18.4.1. Data validation - price data

The responsible officers have the control of all the stages of the index compilation and have access to the collected prices in a near and real time to the collection phase, ensuring the quality of the micro-data at a large degree.

a. At the data entry specific test procedures are carried out in order to eliminate the possibility of data entry errors. The data set is checked for completeness by region and ECOICOP subcategories and detection of missing observations (the developed excel files have the possibility to apply suitable controls in order to detect missing price observations or data entry errors). Particularly, a first assessment of the price changes from the one month to the other is made (the acceptable month to month price change  is set to ±30% for prices less than €1000 and to ±10% for prices greater than €1000). In addition, special offers, discounts, substitutes of items or outlets and missing values are also assessed. Also, for specific ECOICOP categories (Clothing, Technology products, Cars) the prices are further compared to the previous year prices in order to trace any unexpected movements. Additionally, elementary aggregate indices with no price change at all for an extended period are further investigated.

b. In collaboration with the price collectors, the detected errors are corrected. Specifically, the officers of the central office clarify whether irregular price changes were due to typos and are corrected. In a different case, more information is given from the price collectors regarding the odd price change and the officers evaluate the situation and decide the treatment that would be applied.

c. For each product/service a detailed description is given and in the case of a replacement is ensured that there is consistency of the price information over time.

d. In general, the outlets with the highest sales are the chain stores which can be found in every district of the island and are included in the sample for the HICP purposes. This ensures the consistency of the price information across similar products in the same period since similar price changes of similar products are expected.

e. In general, prices are used as are monitored from the price collectors except in special cases where these are evaluated and then decide if they would be accepted on not.  Prices are only rejected if they do not satisfy HICP concepts and the rejected prices are treated as missing observations.

18.5.1. Elementary price index formulae

a. HICP is a Laspeyres-type index according to the requirement of the article 9 of the new framework Regulation (EU) 2016/792.

b. Concerning the calculation of elementary aggregates (that is the individual indices of a specific item in each price collection city) the geometric mean of all prices of an item is used. The rationale for the choice of the geometric mean is that is not affected by extreme values, thus price variations are reduced within the elementary aggregate. In particular, the individual index of a specific item is compiled for each city by using the geometric mean of all prices of this item and the corresponding index of the previous month. Therefore, the individual index of a specific item, for the whole Country, is the weighted mean of the individual indices of this item for the four price collection cities, where the weights used are the population weights of the above cities.

The formula used for the compilation of the individual price index (sub-index) of a specific item i (where i=1,2,…k), in each price collection city y (where y=1,2,…,m), from its outlets/retails j (where j=1,2,…,n) is

where:

      is the sub-index of the item i, for the city y, in the month t,

    is the price of item i in the outlet j of the price collection city y, in the month t,

   is the price of item i in the outlet j of the price collection city y, in the month t-1.

Then, the index of the item i, for the whole country,  , is calculated as a weighted mean of the sub-indices of this item, for all cities, following the formula below:

where   is the population weight of the city y.

c. The formula used is according to EU regulation 2016/792.

d. 

• Price observations: 2 decimals     
• Weights: Infinite decimals            
• The compilation and transmission of index figures and rates of change: Infinite decimals  
• For publication of index figures and rates of change: 2 decimals for index figures and 1 decimal for the rates of change

e. Rounding is used for price observations and for publication of the index figures.

18.5.2. Aggregation of different data sources

The fifth-digit level of the ECOICOP/HICP index is calculated taking into account the price change between the current month and the December of the previous year. According to this formula the rate of change of the index of a specific fifth-digit item in the month t of year T as compared to the corresponding index in December of the previous year (T-1) equals the weighted rate of change of the individual indices (elementary aggregates) of the items included in it during the same period. The weights used are those of the above items, of year T. More specifically, if the fifth-digit item h includes q price collected items (i=1,2,…,q), then its index in month t of year T,     , is given by the formula below:

where:

      the index of the fifth-digit item h in December of year T-1,

            the weight of the item i in year T,

            the individual index of the item i in month t of year T,

      the individual index of the item i in December of year T-1.

A similar methodology is followed for the calculation of individual indices in the upper levels (two-digit, three-digit and four-digit) of ECOICOP/HICP and the calculation of the overall HICP as well.

18.5.3. Chaining, linking and splicing methods

a. HICP can be considered as a chained index which reflects the differences in price changes between the current month and the December of the previous year. At present the index number is calculated with base year 2015=100. Therefore HICP is a chained index with yearly links, but with links going over December, since the weights used for HICP calculation are reviewed annually (every January) and price updated to the previous December. Nevertheless, the usage of Table 24 (National Accounts) as the main source for the weights revision has resulted into a better statistical information for the households consumption expenditures and hence to a better (more representative) link between the years.

b. No splicing is used in our time series

18.5.4. Quality adjustment – Detailed information

a. Generally, in the case of a replacement is important to apply quality adjustment procedures in order to determine pure price change.

Explicit quality adjustment procedures are used to estimate directly the price change of a product whose characteristics change over time. The differences in the physical characteristics of two products are evaluated based either on quantity adjustment (when the only difference is in the quantity included) or on expert judgment (when the quality change is estimated by experts) and no hedonic methods are used. Also, in cases where the replacement incorporates features formerly available as option at additional cost then the option costs method is applied, whereby the additional characteristics are priced separately as optional features and then a percentage of this value (usually 50 per cent) is used.

Implicit quality adjustment procedures are applied in the cases of an overlap replacement (bridging) when the value of the quality change is assessed to be equal to the price difference in the overlap period, where the two products were available.

Also in the cases where the quality does not change significantly (the change is assessed as zero) the prices are directly compared (direct comparison).

Initially, the quality control is made by the price collectors, who are instructed to carefully monitor all the product characteristics and to identify any quality changes. Then the central office decides which quality adjustment method to apply in each case. The incidence of quality changes and adjustments is monitored but there no available sufficient statistics about this.

In the context of the recommendations on bridged overlap:

• if the last price of the replaced product-offer is a reduced price then the relative price change is taken into account for the replacement. 
• if the first price of the new product is a reduced price then a relative price change is applied taken into account the full price of the product.
• if the first price of the new product offer is unusually high then the price of new product is investigated to see if its representable (compare to other products in the same ECOICOP).

There is not any documentation that is readily available on the quality adjustments methods applied. Even though quality adjustment methods are carried out, those are not clearly marked thus is not easy to prepare corresponding documentation. 

18.5.5. Seasonal items

The ECOICOP classes 01.1.6 Fruits, 01.1.7 Vegetables and 03.1.2 Clothing, 03.2.1 Footwear and 09.6.0.2 Package International holidays are treated as seasonal for HICP purposes.

The ECOICOP class 01.1.3 Fish and seafood is not treated as seasonal one since they are available throughout the year. 

Not applicable.