4 January 2017 Consumer price indices: provisional data December 2016 In December 2016, according to provisional estimates, te Italian consumer price index for te wole nation (NIC) increased by 0.4% on montly basis and by 0.5 wit respect to December 2015 (up from +0.1% registered in November 2016). In 2016, te average annual rate of cange of consumer prices, measured by NIC, was negative (-0.1%, from +0.1% in 2015; te previous negative annual rate of cange, equal to -0.4%, was in 1959), wereas, excluding energy and unprocessed food, core inflation was +0.5% (down from +0.7% in 2015). Te significant increase, in December, of te annual rate of cange of All items index was mainly due to te speed-up of te annual growt of prices of Services related to transport (+2.6%, from +0.9% in November), of Non-regulated energy products (+2.4%, +0.3% in November) and of Unprocessed food (+1.8%, from +0.2% in November). Excluding energy and unprocessed food, core inflation in December was +0.6% (up from +0.4% registered in te previous mont); excluding only energy, te inflation was +0.7% (0.3 percentage points iger tan tat of November 2016). Te increase, wit respect to November 2016, of All items index was essentially due to te montly increase of prices of Services related to transport (+1.9%), Non-regulated energy products (+1.1%), Unprocessed food (+1.0%) and Services related to recreation, including repair and personal care (+0.5%). Te annual rate of cange of prices of Goods was +0.1% (from -0.4 observed in te previous mont; te first positive rate of cange after negative tirty-four) and te annual rate of cange of prices of Services was +0.9% (up from +0.5% in November 2016). As a consequence, te inflationary gap between Services and Goods decreased by 0.1 percentage points wit respect to November 2016. Prices of Grocery and unprocessed food increased by 0.4% on montly basis and rose by 0.6% on annual basis (up from -0.1% in November 2016). In December 2016, according to preliminary estimates, te Italian armonized index of consumer prices (HICP) increased by 0.4% wit respect to te previous mont and by 0.5% wit respect to December 2015 (from +0.1% in November 2016). Te average annual inflation rate for 2016, measured by Italian HICP, was equal to -0.1% (from +0.1 in 2015). ITALIAN CONSUMER PRICE INDICES. December 2016 (base 2015=100) (a) INDICES Dec-16 Dec-16 2016 December 2016 Nov-16 Dec-15 2015 Italian consumer price index for te wole nation (NIC) 100.3 0.4 0.5-0.1 Italian armonized index of consumer prices (HICP) 101.1 0.4 0.5-0.1 (a) Te previous reference base year was 2010=100 for NIC and 2005=100 for HICP. Te m/m-12 rates of cange and 2016 annual rate of NIC were calculated passing troug te splicing coefficients (look at te Metodological Note at te end of tis press release), wereas for HICP tey were calculated using a time series rebased on 2015 as reference year.
TABLE 1. ITALIAN CONSUMER PRICE INDEX FOR THE WHOLE NATION (NIC), BY COICOP DIVISION. December 2016, weigts, indices and percentage canges (base 2015=100) (a) Divisions Weigts Indices Dec-16 Dec-16 Nov-16 Dec-15 2016 2015 Nov-16 Dec-15 Nov-15 Nov-15 2015 2014 Food and non-alcoolic beverages 165,706 101.1 0.5 0.8 0.0-0.3 0.2 1.1 Alcoolic beverages, tobacco 32,497 102.0-0.2 1.8 1.9-0.1 1.5 2.7 Cloting and footwear 71,837 100.8 0.0 0.5 0.5 0.0 0.5 0.4 Housing, water, electricity, gas and oter fuels 114,454 98.5 0.0-1.9-1.9 0.0-1.7-0.8 Furnisings, ouseold equipment and routine ouseold maintenance 71,798 100.3 0.0 0.2 0.2 0.0 0.3 0.4 Healt 86,049 100.4 0.0 0.4 0.4 0.0 0.4 0.4 Transport 133,218 100.2 1.4 2.2 0.7-0.1-1.4-2.7 Communication 26,950 98.3 0.3-3.1-2.5 0.9-0.4-1.1 Recreation and culture 77,890 101.1 1.3 0.5 0.2 1.0 0.6 0.2 Education 12,482 100.0 0.0-0.9-0.9 0.0 0.7 1.7 Restaurants and otels 114,490 100.0-0.2 0.7 0.7-0.3 0.7 1.3 Miscellaneous goods and services 92,629 100.7 0.0 0.9 0.7-0.2 0.3 0.2 ALL ITEMS 1,000,000 100.3 0.4 0.5 0.1 0.0-0.1 0.1 (a) Te previous base year was 2010=100. Te m/m-12 and 2016 annual rates of cange of NIC were calculated passing troug te splicing coefficients (look at te Metodological Note at te end of tis press release). TABLE 2. ITALIAN CONSUMER PRICE INDEX FOR THE WHOLE NATION (NIC), BY TYPE OF PRODUCTS. December 2016, weigts, indices and percentage canges (base 2015=100) (a) Special aggregates Weigts Indices Dec-16 Dec-16 Nov-16 Dec-15 2016 2015 Nov-16 Dec-15 Nov-15 Nov-15 2015 2014 Food including alcool: 176,293 101.0 0.4 0.7 0.0-0.4 0.2 1.0 Processed food including alcool 105,400 100.1 0.0 0.0 0.0 0.0 0.0 0.4 Unprocessed food 70,893 102.3 1.0 1.8 0.2-0.6 0.4 2.2 Energy: 89,593 96.1 0.6-1.9-3.0-0.4-5.6-6.8 Regulated energy products 46,894 94.8 0.0-5.9-5.9 0.0-5.0-2.6 Non-regulated energy products 42,699 97.6 1.1 2.4 0.3-0.9-5.9-10.3 Tobacco 21,910 102.9-0.3 2.8 2.9-0.2 2.1 3.6 Non energy industrial goods: 249,402 100.5 0.0 0.1 0.2 0.1 0.5 0.3 Durable goods 79,828 100.7 0.2-0.1 0.2 0.5 1.0 0.2 Non-durable goods 67,677 100.1 0.0 0.1 0.1 0.0 0.1 0.7 Semi-durable goods 101,897 100.6 0.0 0.3 0.0-0.3 0.3 0.3 Goods 537,198 100.0 0.3 0.1-0.4-0.2-0.6-0.5 Services related to ousing 77,764 101.0 0.0 0.7 0.8 0.1 0.8 0.3 Services related to communication 20,997 98.3-0.5-2.2-1.5 0.2-0.9 0.6 Services related to recreation, including repair and personal care 175,565 100.6 0.5 0.9 0.7 0.3 0.7 0.9 Services related to transport 73,869 101.5 1.9 2.6 0.9 0.3 0.6 0.3 Services - miscellaneous 114,607 100.8 0.1 0.7 0.5-0.1 0.5 0.7 Services 462,802 100.7 0.5 0.9 0.5 0.1 0.6 0.6 ALL ITEMS 1,000,000 100.3 0.4 0.5 0.1 0.0-0.1 0.1 All items excluding energy and unprocessed food (Core inflation) 839,514 100.6 0.3 0.6 0.4 0.1 0.5 0.7 All items excluding energy, food, alcool and tobacco 712,204 100.6 0.3 0.6 0.4 0.1 0.5 0.5 All items excluding energy 910,407 100.7 0.3 0.7 0.4 0.0 0.4 0.8 Grocery and unprocessed food 199,682 100.8 0.4 0.6-0.1-0.3 0.1 0.8 (a) ) Te previous base year was 2010=100. Te m/m-12 and 2016 annual rates of cange of NIC were calculated passing troug te splicing coefficients (look at te Metodological Note at te end of tis press release). 2
TABLE 3. ITALIAN HARMONIZED CONSUMER PRICE INDEX (HICP), BY COICOP DIVISION. December 2016, weigts, indices and percentage canges (base 2015=100) (a) Divisions Weigts Indices Dec-16 Dec-16 Nov-16 Dec-15 2016 2015 Nov-16 Dec-15 Nov-15 Nov-15 2015 2014 Food and non-alcoolic beverages 176,326 101.0 0.3 0.9 0.2-0.4 0.2 1.1 Alcoolic beverages. tobacco 34,597 101.8-0.3 1.8 1.8-0.2 1.4 2.7 Cloting and footwear 83,102 109.9 0.0 0.5 0.4-0.1 0.5 0.1 Housing, water, electricity, gas and oter fuels 122,032 98.6 0.1-1.9-1.9 0.1-1.6-0.8 Furnisings, ouseold equipment and routine ouseold maintenance 76,724 100.4 0.0 0.1 0.0-0.1 0.2 0.4 Healt 41,506 101.2 0.0 0.7 0.7 0.0 1.0 1.1 Transport 141,802 100.2 1.4 2.2 0.7-0.1-1.4-2.7 Communication 28,727 98.4 0.3-3.1-2.4 1.0-0.3-1.2 Recreation and culture 60,996 101.6 1.9 0.7 0.1 1.3 0.7 0.3 Education 13,314 99.9 0.0-0.9-0.9 0.0 0.6 1.8 Restaurants and otels 121,889 100.1-0.2 0.8 0.7-0.3 0.7 1.3 Miscellaneous goods and services 98,985 101.1 0.0 0.9 0.8-0.1 0.3 0.1 ALL ITEMS 1,000,000 101.1 0.4 0.5 0.1-0.1-0.1 0.1 (a) Te previous base year was 2005=100. Te m/m-12 and 2016 annual rates of cange of HICP were calculated using a time series rebased on 2015 as reference year. TABLE 4. ITALIAN HARMONIZED CONSUMER PRICE INDEX (HICP), BY SPECIAL AGGREGATES. December 2016, weigts, indices and percentage canges (base 2015=100) (a) Special aggregates Weigts Indices Dec-16 Dec-16 Nov-16 Dec-15 2016 2015 Nov-16 Dec-15 Nov-15 Nov-15 2015 2014 Food. alcool and tobacco 210,923 101.2 0.2 1.1 0.5-0.4 0.4 1.4 Processed food including alcool 118,753 100.4-0.2 0.5 0.5-0.2 0.4 1.0 Unprocessed food 92,170 102.1 0.7 1.8 0.5-0.7 0.5 1.9 Energy 95,516 96.1 0.5-2.0-2.9-0.5-5.5-6.8 Non-energy industrial goods 258,295 103.6-0.1 0.3 0.3-0.1 0.6 0.6 Services 435,266 100.7 0.6 0.9 0.5 0.2 0.6 0.6 ALL ITEMS 1,000,000 101.1 0.4 0.5 0.1-0.1-0.1 0.1 All items excluding energy and unprocessed food (Core inflation) 812,314 101.6 0.3 0.7 0.5 0.1 0.5 0.7 All items excluding energy. food. alcool and tobacco 693,561 101.8 0.4 0.7 0.4 0.1 0.6 0.7 All items excluding energy 904,484 101.6 0.3 0.8 0.5 0.0 0.5 0.9 (a) Te previous base year was 2005=100. Te m/m-12 and 2016 annual rates of cange of HICP were calculated using a time series rebased on 2015 as reference year. For more details please refer to te Italian version Date of previous release: 14 December 2016 Date of next release: 16 January 2017 Contact person: Valeria Stancati (stancati@istat.it) Istat Italian National Institute of Statistics Via Cesare Balbo 16 00184 Rome, Italy pone +39 06 4673.2077 3
Consumer Price Indices Metodological note Te Consumer Price Index for te wole nation (NIC) is based on te consumption of te entire present population. Te Harmonised index of Consumer Prices (HICP), calculated according to te EU regulations in force, is used for te comparison of inflation between Member States and as a key indicator for te monetary policy of te European Central Bank. Consumer price indices are calculated using a cained Laspeyres formula, in wic te basket of products and te weigting system are updated annually. Montly indices for te current year are calculated wit reference to December of te previous year (calculation base) and subsequently cained over te period cosen as a reference base in order to be able to measure price trends over a period of time longer tan a year 1. Reference base year for NIC and HICP Te NIC indices are expressed wit 2015=100 as a reference base year 2. Te HICP are calculated and publised wit 2015=100 as a reference base, as establised by te EU Regulation 2015/2010 of te European Commission of 11 November 2015. Classification for consumer expenditure, basket of goods Classification of consumption so far used for HICP, NIC and FOI is te international classification COICOP (Classification of Individual Consumption by Purpose), wose ierarcical structure as 3 levels of disaggregation: Divisions, Groups and Classes of product. Starting from te final data of January 2016, Istat adopts te classification ECOICOP, annexed to te new European framework regulation on armonised indices of consumer prices and te ouse price index, currently under approval, tat provides for te introduction of an additional level of detail, te subclasses of product. Already in 2011, Istat, on te basis of te guidelines tat were consolidated at European level, wit te COICOP Rev.Istat introduced two furter levels of disaggregation, te subclasses of product and consumption segments. Since te final data of January 2016, te subclasses of product tat Istat uses to classify HICP, NIC and FOI will be tose of ECOICOP: altoug te reduction from 235 to 227, largely tey coincide wit tose introduced in 2011; only 21 are non-connectable wit one of te existing subclasses. Even te segments of consumption, representing an articulation of te subclasses of product developed by Istat, ave been made consistent wit te ECOICOP and tey decrease from 326 to 300, of wic 280 connectable wit te previous ones. Consumption segments are in turn divided into product aggregates, wic bring togeter te products of te Istat basket. Table 1 sows te new ierarcical structure to te subclasses adopted for te calculation of NIC and FOI compared wit tat used for te data publised up to December 2015. 1 ISTAT calculates anoter index named consumer price index for blue- and wite-collar worker ouseolds (FOI) based on consumption of ouseolds wose reference person is an employee. 2 Te FOI indices are expressed wit 2015=100 as a reference base year, too. 4
TABLE 1. CLASSIFICATION OF NIC AND FOI: COMPARISON BETWEEN COICOP REV.ISTAT AND ECOICOP COICOP Rev.Istat year 2015 ECOICOP year 2016 12 divisions 12 divisions 43 product groups 43 products groups 101 product classes 101 product classes 235 product subclasses 227 product subclasses Segments of consumption are te most disaggregated level for wic NIC indices referring to te entire national territory are disseminated. For HICP indices, te level of detail of te dissemination is tat of te product classes, and ten it will become, during 2016, taking into account te coices made by Eurostat, te one of te product subclasses. FOI national indices are disseminated for te divisions. At local level (geograpical area, region, province), it NIC indices are publised up to te product groups and FOI indices, just at provincial level, up to te divisions. Furtermore, HICP indices by special aggregates (HICP-SA) are released. HICP-SA indices are calculated using te same classification sceme and te same metod adopted by Eurostat (terefore different from te metod used for te calculation of NIC indices by type of products), in order to guarantee comparability among te Italian HICPs and te HICP of te oter EU countries and te HICPs for te EU and te euro area produced by Eurostat 3. As usual, all te data are available on te Istat data wareouse, I.Stat, in te teme 'prices', subteme 'consumer prices'. All indices are publised in I.Stat, te wareouse of statistics produced by ISTAT, inside te teme Prices, sub-teme Consumer prices (ttp://dati.istat.it/). In I.Stat, in addition to indices at national level, NIC indices at provincial, regional and macro area level and FOI indices at provincial level are publised. Price collection and calculation metod for seasonal product price indices Te metod for collecting and calculating prices of seasonal products is in accordance wit Regulation (EC) no 330/2009 of 22 nd April 2009, wic sets out minimum standards for dealing wit seasonal products in te HICP 4. Tis metod, also used for te NIC 5, is applied to te product groups and classes Fruit, Vegetables, Cloting and Footwear. Te European Regulation defines as a seasonal product one wic, during certain periods of te year (of at least one mont), it may not be possible to purcase, or is purcased in modest or insignificant volumes by consumers. It also establises tat in a given mont seasonal products are considered in season or out of season. On te basis of tis standard, ISTAT as defined a montly calendar for te wole 2016, wic establises in a given mont wen eac specific product belonging to te abovementioned product groups or classes must be considered in season or out of season. Te adoption of a seasonality calendar entails tat te local consumer price survey is carried out only in monts in wic te product in question is defined as in season, wile prices of out of season products will be estimated on te basis of a metod tat is consistent wit standards contained in te aforementioned European regulation. 3 HICP-SA indices ave been released starting from data referred to February 2013. Te description of product classes wic are included in te special aggregates is available on Eurostat web site at te following link: ttp://ec.europa.eu/eurostat/ramon/nomenclatures/index.cfm?targeturl=lst_nom_dtl&strnom=hicp_2000&strlanguagecode=en& IntPcKey=&StrLayoutCode=. Te HICP-SA calculation metod is described in te HICP Compendium wic is downloadable at te following link: ttp://ec.europa.eu/eurostat/documents/3859598/5926625/ks-ra-13-017-en.pdf/59eb2c1c-da1f-472c-b191-3d0c76521f9b?version=1.0. Back series starting from January 2001 are publised on I.Stat, te wareouse of statistics produced by ISTAT, inside te teme Prices (ttp://dati.istat.it). 4 It as been adopted starting from data referred to January 2011. 5 It is used for FOI indices, too. 5
Survey geograpical basis and rate of coverage, temporal coverage Data contributing to te compilation of montly consumer price indices are traditionally collected in two distinct surveys: te local survey, carried out by Municipal Offices of Statistics, under Istat supervision and coordination, and te central survey, carried out directly by Istat. In 2016 te geograpical basis of te survey is made up of 80 municipalities (19 regional capitals and 61 provincial capitals) wic participate in te indices calculation for all te product aggregates of te basket and of oter 16 municipalities (14 provincial capitals) participating in te survey for a subset of products wic includes local tariffs (water supply, solid waste, sewerage collection, gas for domestic use, urban transport, taxi, car transfer ownersip, canteens in scools, public day nursery, etc.), some local services (building worker, football matces, cinema, teatre sows, secondary scool education, canteens in universities etc.) and automotive fuels. Overall, te coverage of te index, measured in terms of resident population in te provinces wit capitals participating in te survey for all items in te basket, is 83.5%. Concerning te basket subset including local tariffs and some local services wose weigt on te NIC basket is equal to 8.9% wit te participation of te oter 12 municipalities, te coverage of te survey, measured in terms of provincial resident population, rises to 92.4%. In te consumer price survey, in 2016, tere are more tan 42.300 statistical units (including outlets, enterprises and institutions) were te price of at least one product is monitored, as well as around 8.000 dwellings for observing rents. 495.500 prices are sent montly to Istat by Municipal Offices of Statistics eac mont. Prices collected eac mont directly by Istat are 111.500; among tese, about 13.000 are collected using web scraping tecniques for consumer electronics products price collection on Internet. Te percentage of products observed directly by Istat, calculated according to te weigt assigned to eac product witin te NIC. is 23.6%. Prices are collected at central level for tose: - tat do sow no variability along national territory or are administered at national or regional level (i.e. tobacco, telepone services, prescription medicines, magazine and oter periodicals, some transport services suc as national and regional railway transport); - tat are tecnically too complex to be collected at territorial level because of continuous tecnology canges (i.e. consumer electronics); - wose consumption is not strictly linked to te territorial areas (tourist services suc as package olidays, bating establisment etc.). Wit regard to te local survey, price collection is carried out in te first fifteen working days: - bi-montly for products wic sow a strong temporal variability of teir prices (fres fruit and vegetables, fres fis; transport fuels; gas in cylinder and eating oil); - once a mont, for te remaining products. For some goods or services, suc as for example, water supply, town gas and natural gas, urban transport by bus and combined urban transport, taxi or tickets (contributions to NHS) for specialist practice, services of medical analysis laboratories and X-ray centres and oter paramedical services, it is detected te price applied te 15 t day of te mont to wic te index is referred. Concerning te centralized survey, price collection is widely carried out once a mont in te first fifteen working days. Hereafter te exceptions to te general rule: - for some goods and services suc as for example tobacco, games of cance, medicines, telecommunications services, regional railway transport, wagon lits, out of town bus services, out of town combined passenger transport, postal services, igway tolls car transfer ownersip, car overaul, it is detected te price applied te 15t day of te mont to wic te index is referred; - tree times per mont, according an annual calendar fixed at te beginning of te year, for national railway transport; - bi-montly for passenger transport by air, passenger transport by sea and inland waterway, local daily newspapers and magazines; - on eac day of te mont for touristic, recreational and cultural services (fun parks entrance ticket, bating establisment, ski lifts, etc.). 6
Weigting structure In te table 1 te weigting structure for te year 2016 of NIC and HICP is reported. TABLE 1. WEIGHTS USED FOR CALCULATING CONSUMER PRICE INDICES. BY EXPENDITURE DIVISION. YEAR 2016. percentage values Expenditure divisions Weigts Food and non-alcoolic beverages 16.5706 17.6326 Alcoolic beverages. tobacco 3.2497 3.4597 Cloting and footwear 7.1837 8.3102 Housing. water. electricity. gas and oter fuels 11.4454 12.2032 Furnisings. ouseold equipment and routine ouseold maintenance 7.1798 7.6724 Healt 8.6049 4.1506 Transport 13.3218 14.1802 Communication 2.6950 2.8727 Recreation and culture 7.7890 6.0996 Education 1.2482 1.3314 Restaurants and otels 11.4490 12.1889 Miscellaneous goods and services 9.2629 9.8985 All items 100.0000 100.0000 NIC HICP Harmonized index of consumer prices at constant tax rates Te Harmonized Index of Consumer Prices at constant tax rates (HICP-CT) 6 is calculated as establised by te Regulation (EC) no 119/2013 of te 11 t February 2013. It measures te cange of prices at constant tax rates. It follows te same computation principles as te HICP, but is based on prices at constant tax rates. Prices at constant tax rates are estimated cancelling out te effects due to canges in taxes in te current mont compared to te tax rates system in force in December of previous year (calculation period base). Te taxes considered in te HICP-CT are tose directly linked to final consumption. Tey are mainly VAT, excise duties and oter taxes on some specific items (suc as cars and insurance). Subsidies and taxes paid on intermediate stages (e.g. production, transportation) are not taken into account. In principle, fort te compilation of HICP-CT, all taxes sould be included and kept constant; owever, due to practical consideration, taxes wic generate very small tax revenues may not be taken into account. In detail, according to recommendations reported in te Eurostat HICP-CT Manual, taxes wic cover less tan 2% of te total tax revenue can be excluded. On te wole, included taxes must cover a minimum of 90% total tax revenue. Terefore in te compilation of te Italian HICP-CT, taxes kept constant are te following: VAT, excise duties on tobacco and energy items (fuels, eating oil, gas, electricity, etc.), te main local surcarge on electricity and gas, tax for te public liability insurance and contribution to te National Healt Service for transport means insurance. On te basis of National Accounts data taxes wic cover less tan 1% of te total tax revenue are excluded and, on te wole, taxes included cover almost 98% of total revenues carried out wit taxes on final consumption. Te HICP-CT covers te same goods and services as tose covered by te HICP. Te same weigt structure is applied as for te HICP (Table 1). As HICP, it as expressed in 2015=100 as a reference base year. Te HICP-CT provides a measure of te teoretical impact of canges of indirect taxes on te overall HICP inflation. It as to be empasised tat it does not provide an exact measure of tis impact, rater an indication for its upper limit. In effect, te difference between HICP and HICP-CT growt rates points to te teoretical impact of tax canges on overall HICP inflation, assuming an instantaneous and full pass-troug of tax rate canges on te price paid by te consumer. 6 Te HICP-CT as been released starting from data referred to Marc 2012. Back series starting from January 2002 are publised on I.Stat, inside te teme Prices (ttp://dati.istat.it). 7
It as to be pointed out tat, during te year, te Italian HICP-CT may be revised following introduction of metodological canges required by indirect taxation system canges. Data become final in te next year to te reference one. Indices rates of cange calculation Hereafter formulae for te calculation of montly, annual and annual average rates of cange for consumer price indices are described 7. Te HICP formulae apply also to HICP-CT. Te first expression concerns calculation of rates of cange between indices in te same reference base period: Montly rate of cange (NIC, HICP) Te montly rate of cange is te current mont s index in respect to te previous mont s index (wit one decimal place), for example: MOR I I Feb, 2012 Jan, 2012 ;I Feb, 2012 Round 100 100;. 1 I Jan, 2012 Annual rate of cange (NIC, HICP) Te annual rate of cange is te current mont s index in respect to te same mont s index a year previously (wit one decimal place), for example: ANR I Feb, 2012 I Feb, 2011 ;I Feb, 2012 Round 100 100;. 1 I Feb, 2011 Annual average rate of cange (NIC) Te annual average rate of cange is te current annual average index in respect to a previous annual average index (wit one decimal place), for example: AVR I 2012 I2011 ;I2012 Round 100 100;. 1 I2011 Annual average rate of cange (HICP) For te HICP, in a different way compared to NIC, te annual average rate of cange is obtained directly from te montly indices and terefore it is based on te unrounded annual average indices. Tis metod, applied in compliance wit Eurostat, guarantees international comparability of data. For example: AVR I 2011 ;I 2012 I Jan, 2012 I Feb, 2012... I Dec, 2012 100 100;. I Jan, 2011 I Feb, 2011... I Dec, 2011 Round 1 Te following expression describes te calculation of montly rate of cange between indices expressed in different reference base year; it can be also used for te calculation of te annual rate of cange and te annual average rate of cange: Montly rate of cange - Indices expressed in different reference base year X, j; X t I I X t 100 100;. 1 1 MOR I m I n, n, Round CX t ; X t 1 CX t1; X t2... CX 2; X1 X1 m, j 7 Te expressions and te rounding rules described for NIC are also carried out for FOI. 8
X were I 1 m, j is te index, wit one decimal place, of te mont m year j, expressed in te more remote reference base X 1, Xt n I, is te index, wit one decimal place, of te mont n year, expressed in te more recent reference base X t, and C( X i ; X i 1) wit i=2..t are te splicing coefficients between contiguous reference bases. Tese coefficients are equal to te annual average index of te year corresponding to te new reference base expressed in te previous base, divided by 100. Tey are as many as base canges ave been carried out during te considered period. Flas estimates of HICP: accuracy and computation metodology Flas estimate of Italian HICP (and NIC) are usually publised on te last working day of te reference mont according to te Eurostat release calendar of HICP flas estimate for euro area. Final data are generally publised around 13 days later. Te aim of te inflation flas estimates is to provide a timely information on inflation, predicting as accurately as possible te final HICP (and NIC) annual rate of cange released about two weeks later. Te analysis of teir revisions represents an important tool to evaluate te correct balancing between te two quality dimensions, timeliness and accuracy. Totally in line wit te Eurostat Statistics Explained on Inflation metodology of te euro area flas estimate, tis section analyses te accuracy of te Italian HICP flas estimates and describes te metodology used in teir computation. Accuracy of flas estimates Table 2 compares te flas estimates and te final HICP annual rates of cange for te same reference mont. Over te last tirteen monts, te maximum difference between te flas estimate all items and te HICP all items annual rates of cange was 0.1. Over te same period, wit reference to te main special aggregates, te maximum differences between te flas estimate and te final HICP annual rates of cange concerned Energy (0.4 recorded in January 2016, 0.8 in April 2016 and 0.2 in May 2016), Non energy industrial goods (0.2 recorded in January 2016 and in August 2016) and Services (0.3 in January 2016). Te igest frequency of revisions for Non energy industrial goods (9 monts out of 13) are mainly due to te seasonal sales dynamics of Cloting and footwear, for wic te partial information available as a iger impact on te flas estimate and terefore it turns out to be less accurate. TABLE 2. FLASH ESTIMATES AND HICP ANNUAL RATES FOR THE ALL-ITEMS AND MAIN SPECIAL AGGREGATES. NOVEMBER 2015-NOVEMBER 2016, percentage values (Base 2015=100) Special aggregates Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Food including alcool and tobacco: Processed food (including alcool, tobacco) Unprocessed food Energy Non energy industrial goods Services All-items All items excluding energy and unprocessed food (Core inflation) All items excluding energy, food, alcool and tobacco All items excluding energy Flas 1.6 1.4 0.8-0.3-0.4-0.1 0.4 0.5 0.9 1.0 0.4 0.1 0.5 HICP 1.7 1.4 0.8-0.3-0.4 0.0 0.4 0.5 0.9 1.0 0.4 0.1 0.5 Flas 1.0 1.0 1.0 0.1 0.0 0.1 0.4 0.5 0.5 0.4 0.5 0.3 0.5 HICP 1.0 1.0 1.0 0.1 0.1 0.1 0.4 0.5 0.5 0.4 0.5 0.3 0.5 Flas 2.6 1.9 0.6-0.9-0.8-0.3 0.4 0.5 1.4 1.9 0.3-0.2 0.5 HICP 2.7 2.0 0.6-0,9-0.8-0.2 0.4 0.6 1.4 1.9 0.4-0.2 0.5 Flas -6.8-5.4-3.7-5.5-7.0-7.4-8.2-7.5-6.9-6.4-3.4-3.5-2.9 HICP -6.8-5.4-4,1-5.5-7.0-8.2-8.4-7.5-6.9-6.4-3.3-3.5-2.9 Flas 0.8 0.8 1.4 0.9 0.8 0.7 0.7 0.4 0.2 0.4 0.4 0.3 0.2 HICP 0.9 0.8 1.2 1.0 0.9 0.8 0.7 0.5 0.2 0.2 0.3 0.3 0.3 Flas 0.5 0.3 0.5 0.4 0.6 0.5 0.5 0.5 0.8 0.6 0.6 0.2 0.6 HICP 0.6 0.3 0.8 0.4 0.6 0.5 0.5 0.5 0.8 0.6 0.6 0.2 0.5 Flas 0.1 0.1 0.4-0.2-0.3-0.3-0.3-0.3-0.1 0.0 0.1-0.1 0.1 HICP 0.2 0.1 0.4-0.2-0.2-0.4-0.3-0.2-0.2-0.1 0.1-0.1 0.1 Flas 0.7 0.6 1.0 0.4 0.6 0.5 0.5 0.5 0.6 0.5 0.5 0.2 0.5 HICP 0.7 0.6 0.9 0.5 0.6 0.5 0.6 0.5 0.6 0.4 0.5 0.2 0.5 Flas 0.6 0.5 1.0 0.5 0.7 0.6 0.6 0.5 0.5 0.5 0.4 0.2 0.4 HICP 0.7 0.5 0.9 0.5 0.8 0.6 0.6 0.5 0.5 0.4 0.4 0.2 0.4 Flas 0.8 0.7 0.9 0.3 0.5 0.5 0.6 0.5 0.6 0.7 0.4 0.2 0.5 HICP 0.8 0.7 0.9 0.3 0.5 0.5 0.6 0.5 0.6 0.6 0.4 0.2 0.5 9
Te Mean Absolute Deviation (MAD) provides anoter way to measure accuracy. It is calculated as te average of te absolute differences between te flas estimate and te final HICP annual rates of cange over te last tirteen monts. Figure 1 sows te MAD for te all-item index and te main special aggregates. Over te last tirteen monts, Energy (0.115 percentage points) and Non energy industrial goods (0.085 percentage points) and ave recorded te igest MADs. FIGURE 1. MEAN ABSOLUTE DEVIATION BETWEEN FLASH ESTIMATES AND HICP ANNUAL RATES. NOVEMBER 2015-NOVEMBER 2016, percentage points Food including alcool and tobacco Processed food (including alcool, tobacco) Unprocessed food 0.015 0.008 0.038 Energy Non energy industrial goods 0.085 0.115 Services All-items All items excluding energy and unprocessed food (Core inflation) All items excluding energy, food, alcool and tobacco All items excluding energy 0.038 0.046 0.031 0.031 0.008 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 Te direction of inflation is correctly predicted if bot te flas estimate and te final one sow increasing (declining or no canging) annual rates of cange wit respect to tose ones calculated in te previous mont. Tere are tree possible outcomes for te comparison of te direction of inflation: - te flas estimate correctly predicts te direction of inflation, so te predicted rise, decline or no cange in inflation is confirmed by final data (denoted by ); - te flas estimate wrongly predicts te direction of inflation, namely it predicts an increase wen tere is a decrease or vice versa (denoted by ); - te flas estimate points to an increase or a decrease but te final annual rate of cange remains uncanged; or te flas estimate predicts no cange in inflation but te final figure points to an increase or a decrease (denoted by ). Over te last tirteen monts, te flas estimate accurately predicted te inflation direction in 120 out of 130 estimates. 10
TABLE 3. FLASH ESTIMATE PREDICTION CAPACITY OF THE DIRECTION OF INFLATION MEASURED BY HICP. NOVEMBER 2015-NOVEMBER 2016 Special Aggregates Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Food including alcool and tobacco: Processed food (including alcool, tobacco) Unprocessed food Energy Non energy industrial goods Services All-items All items excluding energy and unprocessed food (Core inflation) All items excluding energy, food, alcool and tobacco All items excluding energy Computation metodology of flas estimates For te Italian HICP (and NIC) flas estimate compilation, eac mont. - prices collected at local level by around 60 municipalities (out of 80) are used. Out of tese municipalities, tere are te 38 municipalities wic calculate te preliminary local consumer price indices and publis tem independently, at te same time of Istat national CPI and HICP release. Data collected by te oter 16 municipalities participating in te survey for a subset of products (local tariffs and some local services) are not used; tese data are used for te compilation of final indices; - all prices collected directly by ISTAT (via internet and oter sources) are used. Tese prices refer to 76 product aggregates wic cover 21.4% (according to teir weigts) of te Italian HICP basket (23.1% of te NIC one). As soon as indices are calculated for aggregate products for wic prices are collected directly by ISTAT, product aggregate indices for te municipalities, wic participate in te flas estimate of inflation rate, are compiled. For te oter municipalities, wic do not participate in te flas estimation, product aggregate indices are generally 8 calculated applying to te indices of te previous mont, te montly rate of cange of te regional product aggregate indices. Te latter are calculated using data of municipalities wic participate in te flas estimate, as follows: R I m, a i i R ir i I i m,a were i I is te elementary index of product aggregate at municipality level i of te reference mont m of year a and i is equal to te sare of resident population in te municipality i of region R on te total i ir resident population of te region. m, a 8 For some product aggregates among oters, rents and local tariffs suc as water supply, solid waste, sewerage collection, urban transport services by road for te municipalities tat do not participate in te flas estimation, indices are estimated by carrying forward te price of te previous mont. Te adoption of tis different estimation tecnique is due to te fact tat te evolution of prices in te oter municipalities of te same region is not considered a satisfactory proxy. 11
As soon as product aggregate indices of all municipalities are compiled, regional and, ten, national indices are calculated (by product aggregates, by upper aggregates and for all items). If all municipalities of a certain region are not included in te flas estimate, te product aggregate indices of tis region are calculated applying to te indices of te previous mont, te montly rate of cange of national product aggregate indices. Te latter are calculated using data of regions wic participate in te flas estimate, as follows: were (a) and m,a R I R 20 R R1 20 m, a R I 20 R I R1 R R1 is elementary index of product aggregate at regional level of te reference mont (m) of year is equal to te sare of ouseold consumption expenditure for te product aggregate in te region R on te national ouseold consumption expenditure for te same product aggregate. Once product aggregate indices of all regions are compiled, national indices are calculated (by product aggregates, by upper aggregates and for all items). m, a 12