Central Statistical Bureau of Latvia (CSB)

Consumer Price Indices Section

1 Lacplesa Street

Riga LV 1010

LATVIA

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

No deviations from the target population.

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

HICP covers the entire area of the country. 

The sample of towns is formed so, that it covers all the territory of the country and price dynamics is representative for the majority of the population in the region. In the HICP calculation, the weight for each town is based not only on the population of town itself, but also of the area it represents. All the population of Latvia is distributed between the cities and towns in the sample.

3.8.1. Start of time series

The HICP series started in January 1997.

3.8.2. Start of time series - national specifics

See the HICP database

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.

None.

The rules applied for treating the data set with regard to statistical confidentiality are described in the Section 17 of Statistics Law.

Legal basis:

• Regulation (EC) No 223/2009 of the European Parliament and of the Council, of 11 March 2009, on the transmission of data subject to statistical confidentiality to the Statistical Office of the European Communities;
• Nacional Statistics Law

Data are published in aggregated form and don't allow statistical units to be identified, either directly or indirectly 

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.

Harmonised consumer price index release calendar

The release calendar is publically available on the Official statistics portal homepage.

Data are made available to all users simultaneously.

There are no specific users that are granted special or pre-access to HICP data.

Monthly

For data users, HICP indices are available in the Official statistics portal database.

HICP Flash Estimates are not published.

No news release is issued for the HICP.

The HICP is published in the Official statistics portal database.

HICP data available in Official statistics portal of Latvia.

HICP micro-data are not disseminated. 

None.

The HICP Methodological Manual provides the reference methodology for the production of HICP.

10.6.1. Documentation on methodology - national specifics

HICP metadata are available on the Official statistics portal of Latvia.

Reports about HICP compliance monitoring which was carried out in July 2007, March 2013 and April 2022 are available on Eurostat's web page: Quality - Harmonised Indices of Consumer Prices (HICP) - Eurostat (europa.eu).

CSB has introduced Quality Management System (QMS). The system is directed towards providing high user satisfaction and ensuring compliance with regulatory enactments. Based on the structure of Generic Statistical Business Process Model (GSBPM), QMS defines and at the level of procedures describes processes of statistical production as well as sets the persons responsible for the monitoring of processes at all stages of the statistical production. QMS defines the sequence how processes are implemented (i.e., activities to be performed (incl. verifications of processes and statistics, sequence and implementation requirements thereof, as well as persons responsible for the implementation)), procedures used in the evaluation of processes and statistics, as well as any improvements needed.

Since 2018, QMS of the CSB has been certified by the standard ISO 9001:2015 'Quality Management Systems. Requirements' (certified scope: Production of official statistics – planning, development, data acquisition, processing, analysis and dissemination).

11.1.1. Quality management - Compliance Monitoring

Compliance Monitoring

11.1.2. Quality assurance - national specifics

Controls on the quality of the data
Eurostat carried out a HICP compliance monitoring in July 2007 and published a report in September 2007. The report contains several recommendations that were followed up. In March 2013 repeated compliance monitoring visit took place and afterwards most recent compliance monitoring visit happened in April 2022.

The CPI unit has developed a software and computerised system for the automated receipt, processing, and aggregation of data, as well as for checking the consistency of reports with the given criteria and verifying the logical and accounting consistency of the reports.

After data entry into the database data are checked manually in case-by-case approach. Main checks performed regarding correctness of prices entered by price collector, product descriptions, explanatory codes for price changes, products chosen in case of substitution, application of the relevant quality adjustment method, crosschecks between towns, within certain consumption groups as well as comparison to the general market trends. Also information on tax, tariff, excise duties and legislation is followed carefully. If there are additional questions or a need to correct any input mistakes, then price collector is contacted, and necessary corrections are made. After the manual checks for all prices in the month, additional analysis of the higher-level indices is made.

Staff of CPI unit constantly reviews the individual and aggregate indices to check that the price movements are in line with market information.
Supervisors from the CPI unit take a random or targeted audit of individual price collectors.

11.2.1. Compliance monitoring - last report and main results

The last available compliance or follow-up report can be found in the dedicated HICP section ‘Compliance Monitoring’ of Eurostat’s website, under ‘Methodology’.

11.2.2. Quality assessment - national specifics

Refer to Eurostat's Compliance Monitoring Reports of 2007, 2013 and 2022 (see point 11.1).

HICP concepts and methodology have been developed according to international standards and using consumer price statistics experience from other EU Member States. HICPs are considered to be sufficiently accurate for all practical purposes they are put into.

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 HICPs are used as secondary (complementary) indicator for general measure of inflation in the country. The main users are Bank of Latvia and Central Government (Ministry of Economics and Ministry of Finance). HICP has an interest of public media and economic analysts as well.

The mission of the CSB is to provide users of statistical information with independent high-quality official statistics for decision-making, research and discussions. You can provide your opinion on data quality to e-mail: pasts@csp.gov.lv

Indices are calculated and transmitted to Eurostat for all ECOICOP categories of goods and services for which there are significant expenditures according to NA and HBS data, or represent at least one part in a thousand of the total expenditure.

The accuracy of source data is monitored by assessing the methodological soundness of price and weight sources and the adherence to the methodological recommendations.

There are no numerical estimates of HICP sampling errors because they are difficult to quantify due to the complexity of price index structures and due to the common use of non-probability sampling.
The sampling errors may be reduced by using a sample of consumer prices that is as large as possible.

For the HICPs non-sampling errors are not quantified.

Non-sampling errors have been reduced through continuous methodological improvements.

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 fully comparable over time. There have been several improvements in methodology since HICP was introduced with the aim of improving reliability and comparability of the data series. Impact from the changes in the methodology has been assessed through parallel calculation of the index (e.g. in case of implementation of the requirements regarding the treatment of seasonal items).

Differences between the HICP and national CPI

The following expenditure is included in the HICP but excluded from the national CPI: consumption expenditure of non-residents in the economic territory of the country.
Gambling and games of chance are included in the national CPI but excluded from the HICP; expenditure of residents abroad are included in the national CPI.

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

HICP series are revisable under the terms set in Implementing Regulation (EU) 2020/1148. 

During the rebasing exercise of index reference period there were some revisions of published rates of change due to rounding effects.

18.1.1. Weights

To derive weights for the year 2023 data from NA for the three quarters of the year 2022 and fourth quarter as an average of the three available ones were used.

In addition, retail trade statistics, tourism and transport statistics, public financial and operational reports of the enterprises, information on client structures for certain services and other information that could give additional impression about the consumption pattern changes was used.

18.1.1.1. Compilation at elementary aggregate level

The weights derived from the National Accounts are used for ECOICOP 5-digit sub-class level and for elementary product groups the HBS data and additional sources are used. In several cases internal weights are applied to take into account market shares and client structures.

The weights are updated annually and price-updated to December t-1.

18.1.1.2. Compilation of sub-index weights

To derive weights for the year 2023 data from NA for the three quarters of the year 2022 and fourth quarter as an average of the three available ones were used. NA data were complimented by branch statistics data, private sector operational reports information as well as other relevant information on sub-class or individual product in the sample. In most recent weight update expenditure shares refer to year t-1 and are price updated to December t-1.

As main source NA data for three quarters of the year 2022 and fourth quarter as an average of the three available ones is used. In addition, retail trade statistics, tourism and transport statistics, public financial and operational reports of the enterprises, information on client structures for certain services and other information that could give additional impression about the consumption pattern changes was used. The most notable increases were for heat energy, electricity, passenger transport by air, accommodation services and fuels for transport. Weights for most of the mentioned groups increased due to significant price rises during the 2022. As regards passenger transport by air and accommodation services their weight went up due to tourism sector starting to recover after being notably impacted by Covid-19 in previous years.

18.1.1.3. Compilation of sub-index weights

The weights reference period is the year t-1. The weights are updated annually and price–updated to December t-1.

18.1.1.4. Weights – plausibility checking

The weights at all levels are annually updated according to NA, HBS and additional sources as administrative data, branch statistics data, as well as information provided by enterprises and retailers. 

18.1.1.5. Price updating

Price-updating between year t-2 and t-1 was not applied since data used for the 2023 weights calculation either from NA or other public or administered sources refer to the year 2022. Price-updating to December t-1 was applied.

Expenditure values for t-1 derived from NA data and complimented by all the relevant data source information to make the best estimation were price updated to December t-1.

Price updating is performed at ECOICOP sub-class level.

18.1.1.6. Compilation of total household final monetary consumption expenditure

Data for country weights are provided by the NA based on the information at their disposal for the first three quarters of 2022. For the categories for which expenditure were not available (Income in kind and private pension funds) data were estimated based on the information on the categories shares in FCEH (households by consumption purpose) during the previous periods.

Fourth quarter of 2022 is estimated as an average of the first three quarters.

18.1.2. Prices

The price data is based on a survey.

18.1.2.1. Data Source - overview  

18.1.2.2. Scanner data - general information

Scanner data currently are not used for price collection.

18.1.2.3. Web scraping - general information

Web scraped data currently are used for data collection for 9-11 year old used cars and rentals for housing.

Prices are collected from internet advertisement site.

18.1.3. Sampling

18.1.3.1. Sampling design: locations for survey

The consumer price survey is conducted in Riga and 10 other towns covering the whole territory of the country.

18.1.3.2. Sampling design: outlets

All types of outlets, from which prices are collected, are chosen to represent the existing trade and services network, and usually they are based on the three main criteria: popularity among consumers, significant turnover from consumer sales and availability of goods and services included in the HICP basket. The sample of price recording places is regularly updated. If a shop is closed down it is replaced by the equal one. The sample also includes open markets.

18.1.3.3. Sampling design: newly significant goods and services

Relevant market information is collected throughout the year by CPI unit staff, including price collectors. Information from HBS is analysed regularly with an aim to identify new significant products. Towards the end of the year CPI unit decides which products should be introduced into sample and which ones – excluded. The weight of the sub-index, number of elementary aggregates in the sub-index and volatility of price development are main criteria, which are taken into account making a decision. Then CPI unit staff defines specification of the product and prepares the guidelines for each new product. In December, the first full price collection is carried out for new products with an aim to obtain reference period prices.

Price data is collected every month.

18.3.1. Price collection surveys

Survey data are collected by price collectors visiting stores, using internet or by phone. In addition, specific product prices are collected centrally by CPI unit staff.

18.3.2. Timing of price collection

The prices of all goods and services, except for the prices of fuels for transport, are recorded every month from 4th to 20th calendar day. Fuels for transport prices are recorded from 1st to 25th calendar day.

First steps of data validation are carried out at the time of data collection. A number of logical and arithmetical validation rules allow to avoid data entry errors.

For the detection of outliers spatial and historical dimensions of the prices and price movements are examined during the validation process in order to detect any unusual price development, which then is subject of further investigation. CPI unit staff reviews both individual and aggregated indices to check whether the price movements are in line with market information.

18.4.1. Data validation - price data

First steps of data validation are carried out at the time of price collection. A number of logical and arithmetical validation rules allow to avoid data entry errors.  

In case of significant price change (20%) additional notification appears for price collectors and such changes if not an entry error should be confirmed with a comment.

18.5.1. Elementary price index formulae

HICP is Laspeyres-type index.

Arithmetic mean of the prices is used for elementary aggregates.

Number of decimals that are used for HICP:

• Price observations - 2
• Weights - 12
• Compilation and transmission of index and rates of changes - 12
• Publication of index - 2
• Rates of change - 1

Rounding is used for compilation of index. Truncation is not used.

18.5.2. Aggregation of different data sources

Price indices of lower aggregation levels are calculated as the ratio of arithmetic mean prices in the comparison and the reference periods.

For the calculation of higher level price indices and the overall HICP a Laspeyres-type formula that expresses the weighted arithmetic mean value of the lower-level price indices is used:

18.5.3. Chaining, linking and splicing methods

The reference period used in the HICP calculations is the average value of 2015 (2015 = 100). If December of each year is the linking month, then price index in month m in year G is calculated as follows:

I 0 m , G = I 0 D e c , 0 ∗ ( ∏ g = 1 G − 1 I D e c . g − 1 D e c . g ) ∗ I D e c , G − 1 m , G ">

18.5.4. Quality adjustment – Detailed information

Price collectors perform the initial steps for quality adjustment, by selecting the most suitable replacement, estimating the comparability of both products and reporting on the differences in characteristics between them. The instructions and examples are described in the manual for price collectors. Staff of the CPI unit makes the final quality adjustment.

For fruit, vegetables, clothing, footwear, audio recordings, books in rapidly-changing market direct comparison is the primary (most often used) quality adjustment method. For other product categories, mostly the bridged overlap in case of major changes and direct comparison in case of minor changes is used.

Quality adjustment according to fuel efficiency of a car is used for new motor cars.

Two types of second-hand motor cars are included - 3-5 year old and 9-11 year old.

For quality adjustments of 3-5 year old cars supported expert judgement based on age and mileage coefficients in case of minor changes is used. In case of major changes, the bridged overlap is used.

For quality adjustments of 9-11 year old cars direct comparison with weighted average is used.

There are no automatic quality adjustment procedures for any product group. Instead, the choice of method depends on the specific replacement situation and selected replacement product-offer.

18.5.5. Seasonal items

Seasonal products are treated according to the requirements of the Implementing Regulation (EU) 2020/1148.

The following ECOICOP/HICP classes contain seasonal products: 0116, 0312, 0313, 0321, 0551, 0721. To estimate the prices of out-of-season products within ECOICOP/HICP classes 0312, 0321 and 0721 the counter-seasonal estimation method is applied while for the rest of seasonal products - the all-seasonal estimation method.

Sales periods in Latvia are not defined by any legislation and depend upon shops.

The weights for all seasonal products are fixed annual weights.

Not applicable.

Information about HICP and HICP-CT metadata can be found in Official statistics portal of Latvia.