Summary of Romanian INS presentation.

The INS-Romania made a presentation on Consumer Price Index and deflator for Households Consumption Expenditure.

In Romania there are three primary measures of the prices paid by consumers for goods and services. Two of the measures refer to the Consumer Price index (CPI) and Harmonized Index of Consumer prices prepared by the Price Statistic Division and the other is the deflator for Household Consumption Expenditure (HCE) prepared by the National Accounts Department.

The CPI indices and HCE have different purposes and uses and thus, they are constructed differently and tend to behave differently over time.

During the seminar sessions were stressed over the main differences between the CPI and HCE price index, which mainly can be classified as the following:

·         Scope and coverage effect – some items in the HCE are out of scope of the CPI (imputed rents, own consumption expenditure, life insurance, etc.) and the geographical and population coverage may be different in the case of each of these two indices.

·         Weight effect – the relative weights used in CPI are based on households survey, while the relative weights used in HCE price index are based primarily on business survey

·         Formula effect -  the CPI is based on a modified Laspeyres formula, while the HCE price index is based on a Paasche formula

It is clear that the contribution of each effect to overall difference vary from country to country and the explanations of this may be due to different structures of economies, differences between response rate and response quality in the surveys and between inflation rates or stability of prices in each country.

In Romania, it was observed that on average, the CPI grew 0.5 percentage points per year faster than HCE price index, over the period 2001-2008.

The main issue highlighted by the seminar was communication. The statistical office in Ukraine should improve its communication on the two main channels: external and internal. On external channel the statistical office should pay more attention on creating good relations with the main users using different methods of communication: press conferences on specific topics, organization of different meetings in order to present the main statistical developments and the main tasks of the statistical office and to identify the main user needs, etc. One step forward in this direction was done by hosting this seminar.

Internally, there is need to create good relations between departments in order to assure a good transparency of the methods used for compiling different price indices.