MONSTAT - Statistical Office of Montenegro

Department for Price Statistics and Foreign Trade Statistics 

IV Proleterska 2, 81 000 Podgorica

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

Not available.

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

Not available.

3.8.1. Start of time series

The HICP series started in January 1997.

3.8.2. Start of time series - national specifics

January 2011 (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.

Statistical Office of Montenegro is the only institution engaged in the production of the HICP.

Law on Official Statistics and Official Statistical System (Official Gazette of Montenegro No 018/12 from 30 March 2012, 047/19 from 12 August 2019)

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.

Law on Official Statistics (Official Gazette of Montenegro No 018/12 from 30 March 2012, 047/19 from 12 August 2019). Law on Official Statistics and Official Statistical System of Montenegro stipulates the confidentiality of individual data through the chapter XIII Confidentiality and protection of data for needs of official statistics (Articles 54-61).

According to this Law, individual data on natural, legal persons and households shall be confidential and represent official secret (Article 56).

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 publicly available and published at the end of the year for the full following year.

MONSTAT - Release Calendar

MONSTAT website is available to everyone with Internet access. The HICP index is released simultaneously to all users at the same time (11:00 CET) planned by annual advance Calendar of publishing statistical data, a document that is published on the website not later than 20th of December of the current year for the following year (Law on Official Statistics and Official Statistical System, article 50). The document covers statistical activities of all official statistics producers defined by the Law on Official Statistics and Official Statistical System of Montenegro.

Monthly

See points below.

The HICP data for Montenegro can be accessed via the link to Eurostat's database under the section 'Data' on the MONSTAT website. Reference to HICP data is also made in the CPI Press Release.

Reference to HICP data is made within the CPI Press Release.

HICP database

HICP micro-data are not disseminated. 

None.

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

HICP reference metadata - Statistical Office of Montenegro - MONSTAT

Quality reports Harmonized Index of Consumer Prices - Statistical Office of Montenegro - MONSTAT

Not available.

The applied quality policy is based on the following International and European standards:

• European Statistics Code of Practice
• Quality Assurance Framework QAF
• Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics

For measurement and assessment of the quality of statistical surveys, the following tools are applied:

• standard quality reports,
• SMIS reports,
• peer reviews.

11.1.1. Quality management - Compliance Monitoring

Compliance Monitoring

11.1.2. Quality assurance - national specifics

Within middle-term deadline, the Statistical Office has chosen the TQM implementation through the following objectives:

1. Strong commitment to users and other interested parties,
2. Quality statistical processes and products,
3. Professional orientation of staff members,
4. Constant improvements,
5. Reduction of overburden of reporting units.

Collected price data are checked and edited in several steps. First, the price collectors' notes and signal indications regarding model changes, missing prices etc. are reviewed. Checks are made for missing or duplicate price records. Then, lists for editing are iteratively produced and reviewed to check for unexpectedly deviating prices, etc. This is to ensure that such data are not due to mistakes in processing, and the data are edited as and when needed. The price collectors' judgmental valuations of quality changes are also reviewed in this process. There is no automatic rejection, all suspicious data are re-checked by collectors. The price collectors or outlets are contacted for further information on specific cases when necessary. Centrally collected prices are entered into the system by central office staff. Department for Price Statistics do validation, calculation and checking of the preliminary indices, comparing with the data from the previous periods. After detailed control and data analysis, the final data are prepared for publication and submitted to the supervisors for final verification.

11.2.1. Compliance monitoring - last report and main results

The last available compliance or follow-up report can be found on Eurostat's web page: Quality - Harmonised Indices of Consumer Prices (HICP).

11.2.2. Quality assessment - national specifics

The quality of the HICP is assessed to be high considering that its concepts and methodology have been developed according to international standards and using consumer price statistics experience from all EU Member States. HICPs are considered to be sufficiently accurate for all practical purposes they are put into. Further work is ongoing to improve the quality and in particular comparability of the index.

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 user of the HICP is the Central Bank of Montenegro, Ministry of Finance and other users are financial institutions, economic analysts, media and public.

The Statistical Office has adopted the Quality Management Strategy, the Guidebook to the Implementation of the Quality Management Strategy, as well as the Plan for the Implementation of the Quality Policy.

In order to measure the degree to which fulfils obligations towards users and within the new quality policy, the Statistical Office conducted User satisfaction survey. Data collection was carried out through a web survey, in the period from 31 May to 20 August 2022. The results of that survey are available on the Statistical Office website.

Indices at the 4-digit level of the ECOICOP/HICP classification are produced and disseminated. More detailed indices are produced but not published.

All national requirements are fulfilled. Considering the international requirements, more precisely the requirements of Eurostat, the Statistical Office produces 3 of the 4 required datasets. We are currently not submitting data for the harmonised index of consumer prices at constant tax rates, which is at the moment in the experimental calculation phase.

The accuracy of HICP is generally considered to be high. 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 is a variety of data sources both for weights (National Account data, Household Budget Survey data, etc.) and prices (visits to local retailers and service providers and central collection via mail, telephone, e-mail and the internet are used). The type of survey and the price collection methods ensure sufficient coverage and timeliness. The outlets, from which prices are collected, are chosen to represent the existing trade and services network and they are based usually on three main criteria: popularity with consumers, significant turnover from consumer sales and availability of goods and services included in the HICP basket. Selection of outlets is purposive (in accordance with turnover in selected cities and turnover in selected outlets).

Criteria for the selection of the number and types of outlets in one city are: type of products or services for which prices are collected; population; turnover; habits of consumer’s location etc. All the private households in the economic territory of the country are covered, whether resident or not and irrespective of their income.

The HICPs are statistical estimates that are subject to sampling errors because they are based on a sample of consumer prices and household expenditures, which are not the complete universe of all prices/expenditures.

MONSTAT who is responsible for the compilation of national results do not generally produce 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. Consequently, no estimates for a global HICP sampling error could be produced.

MONSTAT try to reduce the sampling errors by using a sample of consumer prices that is as large as possible, given resource constraints. Models that optimise the allocation of resources by indicating the number of prices that should be observed in each geographic area and each item category are used in order to minimize the variance of the all-items index.

For the HICPs non-sampling errors are not quantified. MONSTAT tries to reduce non-sampling errors through continuous methodological improvements and survey process improvements such as computer assisted price collection, which can help avoiding coding and typing errors.

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 is produced by MONSTAT from January 2011. HICP data are considered to be comparable over time. Common index reference period is 2015=100.

Different population coverage
The HICP covers household's expenditures taking place within the country, whether those households actually live in the country or whether they are merely visiting the country and covers institutional households as well. On the other hand, CPI record expenditures by resident households, whether that takes place within the country or abroad.

Different data sources for the calculation of weights
The main data source for HICP weights are the National Accounts data, while the main data source for CPI weights is the Household Budget Survey.

Classification

HICP and CPI use the same classification ECOICOP/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 Statistical Office has adopted the revision policy, available on MONSTAT's website.

The published HICP/CPI data may be revised for mistakes, new or improved information, and changes in the system of harmonised rules.

In general, monthly Montenegrin HICP/CPI indices are not subject to revisions. Major changes in the methodology (classification changes, index reference period, etc.) are announced in the frame of the monthly release Harmonised Index of Consumer Prices at the time the change is introduced.

18.1.1. Weights

To derive weights for the year 2023 data from NA were used for the three quarters of the year 2022 and fourth quarter as an estimate on the basis of the same quarter in the previous year.

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 lowest level of aggregation where explicit weights are introduced is ECOICOP 5-digit sub-class level.

The weights derived from the National Accounts are used for ECOICOP 4-digit sub-class level, HBS are used for 5-digit sub-class level and for elementary product groups the HBS data and additional sources are used.

Within item indices we use either regional stratum weights for locally collected items or regional and/or provider/supplier stratum weights for centrally collected items.

In cases where the HBS is not so detailed, this information is also supplemented with information from other sources, e.g. providers of goods/services (travel agencies, providers of mobile phone services, financial services, etc.), economic and market analyses and other surveys conducted by MONSTAT.

For locally collected items, the regional stratum weights for localities are largely derived from the number of people living in each region. Information about outlets, precisely for bigger market share (turnover) of a retail chain of outlets comes from a retail sales survey. 

For some centrally collected items, regional weights are derived from population and turnover data along with information from other sources (e.g. providers of goods/services and research agencies, etc.).

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 were used for the three quarters of the year 2022 and fourth quarter as an estimate on the basis of the same quarter in the previous year. NA data were complemented 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.

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

Data from NA at 4^rt ECOICOP level. At the lowest levels (5- and 6-digit) data from HBS and judgmental method are used.

For calculating sub-indices, HBS and other relevant sources are used.

Below the level of ECOICOP class we use detailed weights to aggregate item indices to ECOICOP classes. Within item indices we use either regional stratum weights for locally collected items or regional and/or provider/supplier stratum weights for centrally collected items.

For item weights, the main source of information is detailed HBS data. In those cases where the HBS is not so detailed, this information is also supplemented with information from other sources, e.g. providers of goods/services (travel agencies, providers of mobile phone services, financial services, etc.), economic and market analyses and other surveys conducted by MONSTAT.

For locally collected items, the regional stratum weights for localities are largely derived from the number of people living in each region. Information about outlets, precisely for bigger market share (turnover) of a retail chain of outlets comes from a retail sales survey.

For some centrally collected items, regional weights are derived from population and turnover data along with information from other sources (e.g. providers of goods/services and research agencies, etc.).

18.1.1.5. Price updating

Weights for elementary groups are updated according to appropriate indexes, which are expressed in the prices of December of the previous year. Weights for the higher levels of aggregation are formed by summing the corresponding elementary groups.

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 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 on the basis of the same quarter in the previous year.

18.1.2. Prices

Price data is based on survey data sources.

In different cases, prices are also collected on the internet, but only for a limited number of product-offers.    

18.1.2.1. Data Source - overview  

Price data is based mainly on survey data sources.

18.1.2.2. Scanner data - general information

Scanner data are currently not used for price collection.

18.1.2.3. Web scraping - general information

Not applicable.

18.1.3. Sampling

18.1.3.1. Sampling design: locations for survey

Prices are collected on a monthly basis for selected goods and services in 5 municipalities: Podgorica, Nikšić, Bijelo Polje, Bar, Budva, which represent the biggest market centres.

18.1.3.2. Sampling design: outlets

Criteria for selection of the number and type of shops in one city are:

• type of product or service for which prices are collected;
• number of inhabitants;
• turnover;
• similarity of prices for the same product in different stores;
• continuous supply of goods within commodity;
• consumer habits;
• location.

The number of inhabitants and types of products are the basic criteria for selection the number of shops by cities. Due to the constant presence in the field and facing the real situation, price collectors are those who, in cooperation with the Department of Price Statistics, will make the final decision regarding the shop selection. The shops are updated every year.

18.1.3.3. Sampling design: newly significant goods and services

The verification of representatives is performed once a year, while the replacements are done when the need occurs. Identification of the newly significant goods and services is based on proposals from price collectors, detailed HBS sourced data and available transaction data. While observing local markets, the price collectors gather information concerning changes in the assortment offered, sales structure, market sectors and significance. New representatives items are included in the price survey at the beginning of a new year. To achieve price dynamics in January in relation to the previous month, there is an additional quotation performed in December.

Price data is collected every month.

18.3.1. Price collection surveys

Prices are collected on a monthly basis for selected goods and services in 5 municipalities: Podgorica, Nikšić, Bijelo Polje, Bar, Budva, which represent the biggest market centres. Price collectors, who are part-time employees, trained by MONSTAT, visit the shops every month according to a defined plan for price collecting and collect the prices referring to the representative list of goods and services. Depending on the type of goods or services, some prices are collected in a centralised manner by the Price Department, by phone or via the Internet. Prices are collected for about 593 major goods and services, representing the main divisions of the ECOICOP classification. Sale of products with reduced prices (price tracker or sales) is considered if discounted prices are available to all consumers without conditions, and if, in the month in which prices are recorded, there are significant sales of products with reduced prices.

18.3.2. Timing of price collection

For the purposes of calculation of the consumer price index, prices are collected once a month in the period from the 3^rd to 25^th of the month, except for the prices of fuel which are collected on a daily basis.

Data validation starts by comparing recorded prices in current and previous months. Price data and reasons for changes in prices are transferred to MONSTAT organisational unit responsible for the HICP, which performs the validation process for all recorded prices. When needed, responsible MONSTAT statisticians can contact the staff working on the field (price collectors), and they in turn check 'suspicious' prices by revisiting places where the data were gathered. In case there are changes in the quality of products, prices need to be adjusted for these changes to estimate what part of the total price change was due to a change in the quality of the product and what part is a genuine price change.

18.4.1. Data validation - price data

See 18.4.

18.5.1. Elementary price index formulae

The price indices for elementary aggregates are calculated as a ratio of geometric mean prices. Indices of a few items (e.g. fuels) are calculated as a ratio of arithmetic mean prices.

In HICP,  MONSTAT calculates the average price of each individual product at the locality of calculation with simple geometric mean from prices collected in all outlets in this locality:

(Pk) ̅=(p1×p2×…×pn )^(1/n)

Pk … average price of the product in the locality

p1… price of the product in the first outlet

n … number of outlets

For petroleum products a simple arithmetic mean o prices collected between the 1st and the 30th of the month is used:

(Pk) ̅=1/n ∑▒(p1+p2+⋯+pn)

Pk … average price of the product in the locality

p1… price of the product in the first outlet

n … number of outlets

From average national prices in each current and base month (December of the previous year) we calculate individual indices for each individual product.

From individual indices we calculate with weighted arithmetic mean aggregate indices, i.e. indices of groups and the total price index according to the following formula:

I_(t/d)=(∑_(i=1)^n▒P ̅_ti/P ̅_di  〖×w〗_di)/(∑_(i=1)^n▒w_di )×100

whereby:

It/d ... index of groups or the total index

pti  ... average national price of product i in the current month

pdi ... average national price of product i in December

wdi ... weight for an individual product in December

n ... number of goods and services.

Each aggregate index (December of the previous year = 100) calculated in this way and all other indices derived from this index and calculated with weights of the weight base period and with the same coverage of products are Laspeyres' indices of fixed type.

18.5.2. Aggregation of different data sources

In order to improve the consumer price index and the harmonized consumer price index, new software application was developed and the process of data processing and publication was automated.

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

Chain linking method is applied at two stages of index calculation. To calculate monthly indices for elementary groups with the base of December of the previous year with the use of monthly indices (the previous month = 100) and to calculate one based indices (2015 = 100) using monthly indices (December of the previous year = 100).

18.5.4. Quality adjustment – Detailed information

As HICP aims at measuring pure price changes, it should be unaffected by changes in the quality of products. Prices therefore need to be adjusted for changes in the quality of goods and services, to estimate what part of the total price change was due to a change in the quality of the product and what part is a genuine price change. The largest number of adjustments for quality change are cases where there is a small change in the product (e.g. packaging and design). If a new product is significantly different from the old product the whole price change is attributed to a change in product quality.

Adjustments for quality differences: In order to deal with quality changes, a case by case approach is adopted. There are three main types of quality adjustment procedure used in our HICP: direct price comparison, explicit methods and implicit methods. Explicit methods that have been used are: option pricing, package size adjustment, judgmental and supported judgmental quality adjustment. Main implicit method is bridge overlap.

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

In January 2013, changes in monitoring the prices of seasonal products were introduced. The methodology for monitoring the prices of seasonal products and calculating their indices was brought in line with the Regulation concerning minimum standards for the treatment of seasonal products in the Harmonised Indices of Consumer Prices, which came into force in January 2011, repealed and replaced by Commission Implementing Regulation (EU) 1148/2020. From January 2013 on seasonal products in our case the following subgroups of goods and services were included: fresh fruit and fresh vegetables.

Not applicable.

None.