The consumer price index is calculated monthly and covers the whole country and all private households. It is a measure of changes in the price of goods and services intended for household consumption. For either methodological or technical reasons, certain purchases, e.g. the purchase of real estate property or certain services (transfers in kind) are not included.
Official base: the base period of the index calculation is December of the previous year. In addition, every month the indices are calculated on the basis of the previous month and the same month of the previous year. All other (quarterly, yearly, etc.) indices are calculated as composite chain indices of the above mentioned monthly indices.
Method of data collection: the selection of representative items (goods and services) as well as outlets is based on information from various sources (retail trade, regional offices, etc.) The purposive selection is concentrated on the volume selling items and outlets proportionate to size. In case of seasonal products, such as fresh fruits and vegetables, farmers markets are also selected for price observation.
Manual or sometimes automatic price collection from the internet is used to collect the prices of those products and services that are purchased primarily online (for example: electric household appliances, accommodation services, airfares).
At present there are approximately 1,000 items to be observed monthly. Altogether more than 80 thousand prices are collected monthly.
All items to be observed are specified according to quality, trade mark, type etc. In certain cases the price collectors have some freedom to select different varieties in different outlets, but they have to leave them unchanged within a given outlet till the selected commodity satisfies the criteria of representative items and expected continuous availability. Replacements are controlled centrally when necessary. Prices (price indices) for seasonal items are imputed when they are out-of-season and cannot be bought in outlets. Certain items, like consumption from own production, credit charges, direct taxes, second-hand transactions except cars are excluded.
The modification of utility price regulations effective from August 2022 is accounted for in the consumer price index proportionally to consumption. The elements of the dual price regime (discounted and household market price) for gas and electricity are weighted according to their share in the payments of households, that is the ratio of their consumption priced either at discounted or at household market price. The amount of gas and electricity available at discounted price is calculated on a 12-month basis. Calculations are based on the gas and electric energy consumption related data of the Hungarian Energy and Public Utility Regulatory Authority (HEA) registered on the level of the economy (with a delay of 2 months due to data availability) as well as the annual data measured by HCSO among households on household consumption. HCSO calculates the amounts to be paid on household level, then, by aggregating these, obtains the data at the level of the economy. As such, HCSO considers, when performing the calculations, the distribution and change of gas and electric energy consumption among households; and, to the extent of available data sources, takes into account household structures (e.g. large families allowances, etc.), too. This way it is ensured that gas and energy consumption is represented in the adequate proportion in the unchanged as well as in the higher price range group in every month.
The weights used for the compilation of the consumer price index (CPI) represent the ratio of goods and services within the final monetary consumption of households. From 2012, the weights are based on provisional macro data of national accounts, relating to year t2, while in previous years this data source was completed with HBS data as well.
During the calculation of the weights from 2021 we also used the preliminary national accounts data already available for the first three quarters of the year t-1, following the methodological recommendations of international organizations, including Eurostat, in order to take into account the significant impact of the new corona virus pandemic on household consumption expenditure. Thus, for the weights of 2023 we also used the data of the first three quarters of 2022.
The CPI is a fixed base weighted index (Laspeyres type). The weights of the 140 basic headings are the same every month throughout the year.
The calculation of CPI: The price relatives of the representative items are calculated by dividing the average price of a given item in the current month by its average price in the base month. The price index of the 140 basic headings is the weighted mean of the price relatives of the included representative items. The price indices of the main groups and the total consumption are the weighted average of 140 basic headings. For the aggregation, the index with the base period of the previous December is used.
From 2012, CPI does not include the cost of imputed rents which was formerly appeared within group of services. According to the regulation of national accounts, this item is not considered as purchased consumption thus it is excluded from the CPI. Hence, there are 140 basic headings instead of the preceding 141.
Publication: The price indices of the groups of commodities are published monthly, quarterly and yearly on different bases. The price indices of different types of households using the weights of the family expenditure structure are also published.
During the calculation of the consumer price index, both average prices and indices are made with several decimal places. Subsequently, when the results are published, the data will be rounded based on:
- In case of average prices, values are rounded without a decimal mark, and over the thousandth magnitude values are rounded to ten HUF or its multiple.
- In case of indices, values are rounded to one decimal place.
The annual CPI, which indicates the annual average price change, is calculated as the arithmetic average of 12-month price changes rounded to two decimal places, where each month is given equal weight in the calculation. The resulting index is then rounded to one decimal point, and this data is included in the publications.
The harmonised indices of consumer prices (HICP) are not and will never be fully harmonised consumer price indices, in as much as the aim is international comparability across the EU Member States and not full harmonisation. HICPs are not intended to replace national CPIs. All Member States are likely to continue their existing CPIs for domestic purposes.
The harmonized indices were based on existing national CPIs, but HICPs are harmonised in several methodological areas as well as coverage.
However, some difficult categories, including owner occupied dwellings, are still not covered by HICP.
The weights of HICP are based fully on the provisional macro data of National Accounts relating to the year t-2 while in previous years this data source was completed with the HBS data as well. The methodology of the weight calculation is fully in line with the recommendation of the implemented Commission Regulation (EU) No 1114/2010 which is in force from 1 January 2012. During the calculation of the weights from 2021 we also used the preliminary national accounts data already available for the first three quarters of the year t-1, following the methodological recommendations of international organizations, including Eurostat, with regard to the new corona virus epidemic. Thus, for the weights of 2023 we also used the data of the first three quarters of 2022.
Guidance on the compilation of HICP weights in case of large changes in consumer expenditures Eurostat Methodological note
The weights should include expenditure by foreign visitors besides the expenditure by all household which takes place on the economic territory of the given country (domestic concept).
The common index reference period has been the year 2015.
In Hungary, the HICP and the national CPI are almost the same taking the view that the two indices should be as similar as possible for the sake of efficiency. The only differences are that:
in the CPI we use approximately the 'national' concept, while the HICP uses the 'domestic' concept for calculating the weights,
the HICP does not include the cost of imputed rents – which was also excluded from the CPI from 2012 – and gambling are only observable in the CPI
in case of the HICP prices for services shall be entered into the index for the month in which the consumption of the service at the observed prices can commence.
The core or underlying inflation is calculated in order to obtain the long term „core” component of the inflation by eliminating the one-shot shocks in price development from the consumer price index (CPI).
HCSO calculates this indicator from CPI according to the changes in January 2009 by eliminating the following items:
non-processed food items,
alcoholic beverages and tobacco
electricity, gas, and other fuels,
motor fuels and oils,
pharmaceutical products that are reimbursed by the social security,
services which prices are centrally determined by authorities,
imputed rents.
In the course of revising the content of the index, the scope of omitted items expanded in January 2012 and April 2021. In January 2012, the cost of imputed rents was abandoned, considering that from 2012 it is not part of the CPI either. From April 2021, the alcoholic beverages and tobacco products are excluded from the core inflation. We have modified the calculation of the core inflation mainly based on the best practices in Europe whereas the price of these products has been significantly affected in recent years by regular, statutory changes in the rate of excise duty within a year.
Due to the composition of the indicator the coverage is 64% of the CPIs items by their weight in 2023.
After the elimination the remaining items are proportionally re-weighted in order to obtain 100% as the sum of their weights. For core inflation both a seasonally unadjusted and a seasonally adjusted indicator are published.
The core inflation indicator is calculated on December 1994 base.
The TRAMO/SEATS software is used by the HCSO for seasonal adjustment. TRAMO/SEATS is a stochastic, completely model-based approach to decomposition, usually referred to as ARIMA-based signal extraction method.
In consequence of the feature of seasonal adjustment all earlier published seasonally adjusted data can alter monthly retrospectively in each new publication. But the revision of the adjustment model takes place only once a year.
In April 2021, due to the changes in the content of the index we recalculated the time series back to January 1995. Therefore, the time series of unadjusted core inflation also changed occasionally.
The constant tax rate index (CTI) eliminates from the CPI the impact of changes of the most important indirect taxes (VAT, excise duties, registration taxes for new motor cars). The CTI shows that how much the CPI would be if the reference period (December of the previous year) tax rates were in force in the current observation period. The aim of the CTI's calculation is the separation of the impact of indirect tax changes within the CPI. CTI is calculated on the base of December of the previous year similarly to the CPI and the same weights are applied for the aggregation of the CTI's sub-indices.
The consumer price index for pensioners, such as the consumer price index, is a national average indicator.
During its calculation, we excluded from the coverage those products and services that cannot be related to the pensioners actual consumption. These items are the so-called imputed rents (which is not part of the consumer price index refer to the total households since 2012) and items related to parenting, i.e. meals at schools, kindergartens as well as nurseries, children's and infant's clothing and footwear, school-books, school and stationery supplies, educational services. Beside the excluded product groups, the consumer price index for consumers also differs in its weights from the general consumer price index, because the weights reflect the consumption structure of pensioners only instead of the whole population.
Source of methodology: Methodology of the Consumer Price Index (2000, HCSO, Budapest)