Italian National Institute of Statistics

Integrated System on Economic Conditions and Consumer prices Unit

Via C. Balbo, 16

00184 Roma

ITALY

Harmonised indices of consumer prices (HICP) give comparable measures of inflation for the countries and country groups they are produced. They are economic indicators that measure the change over time of the prices of consumer goods and services acquired by households. In other words they are a set of consumer price indices (CPIs) calculated according to a harmonised approach and a single set of definitions.

ECOICOP/HICP (European Classification of Individual Consumption by Purpose adapted to the needs of Harmonised Indices of Consumer Prices).

HICP covers the whole household sector, more precisely the goods and services that are acquired by households.

The published data are as:

Monthly data:

• Indices (HICP 2015=100)
• Annual rates of change
• Monthly rates of change

 Annual data:

• Average index and rate of change
• Weights by ECOICOP divisions

Each published index or rate of change refers to the 'final monetary consumption expenditure' of the whole household sector of the country.

The target statistical universe is the 'household final monetary consumption expenditure' (HFMCE) within the country. 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 national and regional accounts (ESA 2010).

HICP comprise all purchases by households within the territory of the country; those by both resident and non-resident households (i.e. 'domestic concept'). HICP cover the prices paid for goods and services in monetary transactions.

The prices measured are those actually faced by consumers. The HICP exclude interest and credit charges, regarding them as financing costs rather than consumption expenditure.

Italy (San Marino and the Vatican State are not covered).

In 2017, prices are collected from 80 municipalities (18 regional chief towns and 61 provincial chief towns and 1 municipality with more 30,000 inhabitants) - which participate in the indices calculation of all representative items included in the basket - and from other 16 municipalities participating in the survey for a subset of products which includes local tariffs and some local services.

Price collection is not carried out in villages or rural areas.

For the automotive fuel, the territorial coverage is complete since 2017 by using the data base of the Ministry of Economic Development (MISE).

For the whole basket, the coverage of the index, in terms of residente populatin in the provinces whose chief towns take part in the survey, is 83.7%. Concerning the basket subset including local tariffs and some local services, with the participation of the other 16 municipalities, the rate of coverage, measured in terms of resident populatione, rises to 92.4%.

HICP are available since 1997.

HICP is produced and published with reference period 2015=100 starting from January 2001.

A set of monthly HICP series for the period 2001-2015 using 2005 as reference base year are also available; a set of monthly HICP series for the period 1997-2000, using 1996 as reference base year, are available at request.

Following units are used:

• Index (actually unitless, i.e. it is the ratio of the price of the basket in a given year to the price in the base year multiplied by 100. However, the HICP can be thought of as the amount the average consumer would have to spend in a given year to buy the same basic goods and services that one would have to pay 100 monetary units for in the base period);
• Percentage change on the same period of the previous year (rates);
• Percentage change on the previous period (rates);
• Percentage share of the total (weights).

Month.

Harmonised Indices of Consumer Prices (HICPs) are harmonised inflation figures required under the Treaty on the Functioning of the European Union. Council Regulation (EC) No. 2016/792 of 11 May 2016 (OJ L 135) sets the legal basis for establishing a harmonised methodology for the compilation of the HICP. Under this Regulation, the Commission has brought forward detailed Regulations establishing the specific rules governing the production of harmonised index. All relevant regulations and methodological details can be found in the HICP section on Eurostat's website under Methodology => Legislation.

All statistics produced and published by the Italian National Institute of Statistics (Istat) are subjected to:

• the Legislative Decree No 322/1989 (and subsequent modifications and additions Decree of the President of the Republic (DPR) No 166 of 7 September 2010), which is consistent with the UN Fundamental Principles of Official Statistics and places Istat at the centre of the National Statistical System (Sistan). Sistan covers the statistical offices of all levels of government, Chambers of commerce, industry, crafts industries, agriculture and other public bodies as well as private subjets having public functions;
  
  
• the Decree of the President of the Council of Ministers (DPCM) which every year approves the National Statistical Programme.

The Italian Laws No 222/1927 and No 621/1975 specify the responsibilities and tasks of the agencies that contribute to the production of the Consumer price indices, i.e. Istat and Municipal Offices of Statistics (MOS).

The Legislative Decree No 322 of 6 September 1989 contains provisions on data sharing and coordination within SISTAN: according to the article No 6 Statistical Offices, under the coordination of Istat, shall cooperate with other authorities for the execution of the surveys provided for in the National Statistical Programme.

Directives issued by COMSTAT have further strengthened these provisions. In addition, Istat has developed statistical information systems utilized throughout SISTAN for sharing data. Istat also cooperates closely with agencies that do not belong to SISTAN through specific data sharing protocols and agreements. According to the Regulation (EC) No 223/2009 and to the DPR No 166 of 7 September 2010, Istat is part of the European Statistical System and coordinates and shares data with the Commission (Eurostat) and the others national statistical institutes and other national authorities responsible in each Member State for the development, production and dissemination of European Statistics.

Regulation (EU) No 2015/759 of the European Parliament and of the Council of 29 April 2015 amending Regulation (EC) No 223/2009 on European statistics (recital 24 and Article 20(4)) of 11 March 2009 (OJ L 87, p. 164), stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those confidential data with due account for technical developments and the requirements of users in a democratic society.

Istat is obliged by law to respect the principle of statistical confidentiality (Article 9 of Legislative Decree No 322/89) upon which the National Statistical System is founded with regard to data collected during its own surveys. These data, therefore, are used exclusively for statistical purposes and may not be divulged to any party – public or private – outside the National Statistical System, or otherwise published or divulged, except in aggregate form and in such a way that it is impossible to identify the person to whom the data apply.

The compliance with the statistical confidentiality parties an aspect  of the broader principle of personal data protection as provided for by the Ethical code of conduct concerning the protection of personal data (Legislative Decree No 196/03) and specifically Annex A3, 'Ethical code for the processing of personal data for statistical purposes within Sistan'.

In order to make statistical confidentiality and protection of personal data effective, Istat is currently taking appropriate organisational, logistical, methodological and statistical measures in accordance with internationally established standards.

The release calendar is publically available and published at the end of the year for the full following year.

Istat website: Release calendar 2017.

In line with the Legislative Decree No 322/1989 (Article 15, paragraph 1[g] – requirement to publish and disseminate data) and the Italian Statistics Code of Practice (issued by the Comstat - Policy-making and Co-ordinating Committee for Statistical information - under Directive no. 10/2010 in full accordance with the European Statistics Code of Practice), Istat disseminates statistics, mainly on Istat’s website, (see item 10 - ‘Dissemination format’) 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 Carta dei servizi esterni della Diffusione (Charter of Dissemination Services).

Harmonised consumer price indices are produced monthly.

Press releases on-line.

The HICPs for the 12 ECOICOP Divisions and the total are published in time series tables attached to Press release.

Italian HICP indices, with a level of detail of the ECOICOP-HICP product classes and by special aggregates and Italian HICP-CT indices, with a level of detail of ECOICOP divisions, are published in I.Stat, the warehouse of statistics produced by Istat, inside the theme Prices.

None.

See also Istat’s CPIs section website.

Methodological notes on the Italian HICP and national CPIs are published in:

• Information note Consumer Price indices 2017: Basket, weight structure and survey updating, February 2017
  
  
• HICP 2017: Basket of goods and services, February 2017
  
  
• CPIs: general aspects and survey methodology, 2013 (only in Italian)

See Eurostat's Compliance Monitoring Report of 2007 and 2014.

Statistical practice used to compile HICP is compliant with HICP methodological requirements and good practices in the field of CPIs Data production process and data quality are regularly carried out both by Istat and Municipal Offices of Statistics (MOS) that are officially in charge of data collection.

Monitoring activity is carried out using different indicators regarding outlet selection, price collection schedule and quality of collected data (temporary non-collection rate by different reasons – outlet closing,  missing items etc; replacement item rate, temporary price reduction rate).

At first stage, data quality are monitored by MOS. At a second stage, Istat carries out a complete check on the entire data-set collected both by MOS and at central level  (493,000 prices are monthly collected).

Istat regularly provides data collectors with training interventions geared towards acquiring appropriate skills for carrying out collection activity.

The quality of the HICP can be assessed high. Its concepts and methodology has been developed according harmonised standards. HICP accuracy is considerably improved following changes introduced in the data collection and data editing processes. The main users consider HICP sufficiently accurate for their purposes. It is disseminated following a pre-announced timetable.

Further work is ongoing to improve the quality. Priorities are quality adjustment methods, dissemination and accessibility of documentation.

The HICP is mainly used for measuring price trends, economic forecasting and analysis, accounting purpose and deflating series and inflation targeting.

The main users include European Central Bank, European Commission, Bank of Italy, Finance and Economy Ministry, Economic Development Ministry, universities, public and private research institutes, trade associations, National Accounts Division and other Istat sections; media and public at large.

No information.

All ECOICOP indices at 5-digit level are produced and at 4-digit level are disseminated.

The accuracy of HICP can be assessed high. The accuracy of data source is monitored by assessing the methodological soundness of price and  weight sources and the adherence to the harmonised methodology. Price collection assure good coverage and timeliness. Outlets, where price are collected, are selected to represent the Italian trade and services network. All the private household in the economic territory are covered.

The HICP sampling error is not quantified cause a non-probability sampling is used. Sampling errors are reduced using a large amount of consumer prices; furthermore, in order to minimize the variance of the all-items index, a representative number of prices for each item category is collected. 

The HICP non-sampling errors are not quantified. They are considerably reduced in the last years with the in-depth reengineering of the whole Consumer Price survey IT environment. The new IT architecture is based on:

• a centralized relational database that stores all the survey data;
  
  
• a new data collection application, running on PC Tablets;
  
  
• a new control and correction application which allows to perform checks and editing on micro data directly on the database and makes available several sets of indicators to monitor data quality.

The Flash estimate of Italian HICP is usually published on the last working day of the reference month.

The final data are published monthly according to the pre-announced Release calendar in general between 13 and 15 days after the end of the reference month.

The Italian HICP has always been published on the pre-announced release dates (no deviation from the annuonced date occurred in any of the months).

There are no problems of comparability at geographical level. The Italian HICP is calculated at national level only. Its comparability with those of the other Member States is guaranteed by the respect of EU Regulations.

Data on Italian HICP are available with reference period 2015=100 starting from January 2001 onward.

A set of monthly HICP series for the period 2001-2015 using 2005 as reference base year are also available; a set of monthly HICP series for the period 1997-2000, using 1996 as reference base year, are available at request.

ISTAT produces three different Consumer price indices, based on the same survey:

• Consumer price index for the whole nation (NIC Index);
• Harmonised index of consumer prices (HICP Index);
• Consumer price index for blue- and white-collar worker households (FOI Index).

Differences between the HICP and the national CPIs:

• as HICP, national CPI NIC refers to the entire population present in the country, whereas the national CPI FOI refers to a subpopulation residing in the country;
• national CPIs refer to household final consumption. So, for Health and Education and some Social protection expenditure, they use gross prices (i.e. the total prices of products, whether fully or partially paid by households), whereas the HICP uses net prices (prices actually paid by households);
• national CPIs do not take into account temporary price reductions (i.e. sales);
• national CPIs include in their scope Games of chance;
• concerning pharmaceutical products and some medical and paramedical services, contributions to the NHS are not used for national CPIs calculation (whereas they are included in HICP).

HICP is internally coherent. Higher level aggregations are derived from detailed indices according to well-defined procedures.

The largest components of cost for HICP/CPIs production supported by ISTAT are the staff cost and the grant provided to all municipalities which take part in consumer price survey (the latter is aimed at improving the survey quality and therefore it should be used by municipalities to upgrade the computer equipment and to strengthen the survey organization; with regards to survey organization at local level, the ISTAT grant can be used by municipalities only for financing partially the recourse to  external staff or a surplus of work performed by the internal staff outside of the ordinary work through overtime pay). The ISTAT funding provided to municipalities is established according to the municipal sampling plan (products included in the basket and number of survey units) and the number of collected price quotations

In 2016,

• the sum of labour costs of ISTAT staff working on HICP/CPIs in the central office amounted to 1,25 million €;
• ISTAT funding provided to municipalities amounted to 1,3 million €;
• the costs relating to training activities, purchase of electronic devices for price collection or purchase of data banks was around 400,000 €.

HICP series, including back data, are revisable under the terms set in Commission Regulation (EC) No 1921/2001 of 28 September 2001. The published HICP data may be revised for mistakes, new or improved information, and changes in the system of harmonised rules.

The first data dissemination concerns provisional data for the latest month. These are confirmed or revised to the final figures within the second week of the following month.

Other major revisions are generally released with explanatory notes in the press release. Methodological changes are explained with the first release of data affected by such changes.  

Prices are monthly collected through two distinct surveys carried out at central and territorial level:

•  the survey carried out directly by Istat concerns prices of products that do show no variability along national territory or are administered at national level (i.e. tobacco, magazine and other periodicals), that are technically too complex to be collected at territorial level cause quality adjustment issues (i.e. mobile phones, computers) or whose consumption is not strictly linked to the territorial areas (tourist services, some transport services where data collection is carried out by MOSs). In terms of weights, survey at central level covers the 22.1% of the 2017 HICP basket (137,500 prices per month);
•  the survey at territorial level is carried out by MOSs in 80 municipalities (out of a total of 110) which participate in the indices calculation of all representative items included in the basket and in other 16 municipalities participating in the survey for a subset of products which includes local tariffs (water supply, solid waste, sewerage collection, gas for domestic use, urban transport, taxi, car transfer ownership, canteens in schools, public day nursery, etc.) and some local services (building worker, football matches, cinema, theatre shows, secondary school education, canteens in universities etc.) (501,900 prices per month, including almost 8,000 rents).

In addition, an administrative source is used, i.e. the data base of fuel prices of Ministry of Economic Development. The automotive fuels indices (the weight on the basket is 3.9%) are calculated using this data base, that collects prices for these products. 76,000 price quotes are monthly used to estimate inflation and they come from about 13,596 fuel stations on the territory, that is 69.3% of the ones active and present in Ministry data base. The 13,596 fuel stations cover the entire national territory and they are  located in the different geographical areas as it follows: 3,600 in the North-West; 3,200 in the North-East; 3,000 in the Centre; almost 2,400 in the South and about 1,400 in the Island.

No of price observations per month: 706,500

Sample size

Prices are collected by territorial survey  in more than 41,700 statistical units (including outlets, enterprises and institutions).

The selection of outlets is based on a non-probabilistic sampling: outlets with the highest sales revenues for different groups of products are sampled by Municipal Offices of Statistics (MOS) which carry out the data collection at local level according to methods and standards established by ISTAT. The outlet selection is carried out directly by MOS, according to rules established by ISTAT and on the basis of information gathered from Census, business plans, business registers and other available sources. The extent of the outlet sample varies town by town taking into account:

• relative weight of products in the basket;

• territory size of the municipality;

• demographic size of the town and population distribution on the municipal territory;

• type and distribution of outlets on municipal territory;

• turnover shares of large, small scale and traditional distribution;

• relevance with consumers;

• variability of prices;

• availability of products included in the basket (MOS carry out a preliminary survey in selected outlets to verify the availability of products whose prices have to be collected).

The list of outlets is updated once a year, usually in December.

Dwelling selection for rental survey is carried out directly by MOS taking into account of dwelling size, location, and ownership type (private or public).

Number of representative items at the lowest classification level

The aggregates of products at lowest classification level whose prices are monthly collected are:

All-items 409

01 Food and non-alcoholic beverages 118

02 Alcoholic beverages, tobacco 11

03 Clothing and footwear 40

04 Housing, water, electricity, gas and other fuels 19

05 Furnishings, household equipment and routine maintenance of the house: 37

06 Health 23

07 Transport 35

08 Communications 12

09 Recreation and culture 57

10 Education 5

11 Restaurants and hotels 19

12 Miscellaneous goods and services 33

Many aggregates of products shown singly cover large areas and use sub samples (i.e. mobile phone services are one item but use a sample of about one hundred tariff plans). In the first stage, products selection is carried out by Istat using several sources: National Accounts and Household Budget Survey data; several outside sources and information from MOSs. In the second stage, the product-offers selection is made by price collectors in the field, in accordance with the 'the most sold' principle. Price collection covers both tightly and loosely specified products. Loose specifications are used if the prices within a product group are considered sufficiently homogenous. The product specification for aggregates products is defined for one year.

Price collection takes place once a month for the majority of products during the first fifteen working days of the reference month.

For products which show sharp and irregular price changes within the same month, prices are collected twice a month at the same outlet. This rule is applied in particular for fresh food, such as fish, fruit and vegetables (collection on the 1st and the 10th working day of the reference month) and for some transport services. For fuels prices, collected from data base of Ministry of Economic Development, see par. 18.3 Data collection.
For seasonal products, price collection takes place according a monthly schedule defined at national level that establishes when the product should be considered in-season or out-of-season.

Price collection on the territory is carried out using PC Tablets  with UMTS cards, which are distributed to all data collectors of MOSs involved in the survey. Data collectors load data directly, every day just after collected, into the centralized database. They perform checks and editing on micro data directly on the database, with no confusing data redundancy. A continuous, on-line, real-time system for monitoring price collection activities and the quality of the data collected has been implemented.

Data validation is carried out in two stages. First, data are validated at territorial level by MOSs. Second, Istat carries out validation data analyzing different indicators available such as temporary non-collection rate, replacement item rate, temporary price reduction rate and price change rate for outlier or error detection.

For some group of goods and services, such as energy, outside sources are used to validate data.

As required by law, in each municipality, before to be published, data are examined and validated by Municipal Commissions constituted by experts of economical bodies (Trade Unions, Trade Associations etc.).

Weights

The weighting coefficients for the main aggregates are determined on the basis of the values of household final monetary consumption expenditure as derived from National Accounts. Additional information used to define weights for the elementary headings has derived from the Household Budget Survey, from other Istat survey (foreign trade, industrial production, tourist flow and other surveys) and from external sources. There are 409 item weights at national level. The weights are updated every year. The reference period for current weights is the year 2015, price-updated to December 2016.

Computation of the lowest-level indices

Geometric means are used for computing the elementary price indices in each municipality.

Treatment of missing items and replacements

• Fresh fish and shellfish (prices collected twice a month). If in one of the two times of collection during the month, a missing price observation exist, price collected in the other time is used; if, instead, the price is missing in both times, the average monthly price collected in the previous month is used as estimate;
• Heating and automotive fuels (prices collected twice a month). Missing prices are estimated applying the month to month rate of change of the average prices suggested at national level by the main petrol companies (data provided by the Ministry of Economic Development) with reference to calendar days around those ones of data collection;
• Seasonal products of ECOICOP classes 0.1.16 Fruit and 0.1.17 Vegetables. For the out-of-season period, counter seasonal approach is adopted. In the first month of the out-of-season period, the estimate price is equal to the price of preceding month, adjusted by the change in observed prices on average over all seasonal products that are in-season in the same segment of consumption/sub-class. For the in-season period, observed prices enter in the index computation only if they are collected in both collection times (the price collection is bi-monthly); otherwise they are estimated, coherently with the approach adopted for the out-of-season period;
• Seasonal products of ECOICOP groups 0.3.1 Clothing and 0.3.2 Footwear. For the out-of-season period, counter seasonal approach is adopted. In the first month of the out-of-season period, the estimated price is equal to the last full purchase price observed (not taking into account temporary price reductions) and from the second month, it is equal to the estimated price of the preceding month, adjusted by the change in observed prices on average over all seasonal products that are in-season in the same segment of consumption/sub-class;
• Not seasonal products of ECOICOP classes 0.1.16 Fruit, 0.1.17 Vegetables and ECOICOP groups 0.3.1 Clothing and 0.3.2 Footwear. Missing price is estimated equal to the price for the preceding month, adjusted by the change in observed prices on average over all not seasonal products in the same segment of consumption/sub-class;
• Other not seasonal products which prices are collected at territorial level. Missing price is estimated by carrying forward the price collected in the previous month. This is normally made only for two months. Replacement prices are used from the third month;
• Products which prices are centrally collected. Where prices are missing, statistical methods are used to make an imputation of the price change. Usually, the procedure used for estimation consists of applying the month to month rate of change of observed prices in their particular stratum. If no price observations are available in the lower stratum, the estimation is carried out applying the monthly rate of change calculated on the observed prices of the immediately upper stratum.

 
Introduction of newly significant goods and services

Since the implementation of the HICP, new goods and services have been continuously identified, reported to the Municipal Commission and usually included within 12 months following their identification. Newly significant goods and services are usually identified using information provide by the MOS and a variety of Istat sources and ad-hoc sources. In principle, the introduction of new items is carried out on the occasion of the annual re-basement of the HICP.

Treatment of price reductions

From the year 2001, the HICP has taken into account temporary price reductions (i.e. sales).

Treatment of seasonal items

From 2011, harmonised minimum standards have been applied in compliance with the Commission Regulation no 330/2009 on the treatment of seasonal products. New standards are applied for the following COICOP aggregations: 01.1.6 Fruit, 01.1.7 Vegetables, 03.1 Clothing and 03.2 Footwear.
As required, for non-available prices in out-of-season months, counter-seasonal estimation is adopted.

During 2011, the impact on the inflation rate was monthly estimated and released in an information note published in conjunction with press release (final data).

Adjustment for quality differences

In order to deal with quality changes, a case-by-case approach is adopted.
Where appropriate, an implicit estimate is made of quality change (methods adopted are: overlap, bridged overlap and combination of bridged overlap and class mean imputation). Where it is not possible to calculate the quality change, a direct comparison is made. Where the reference universe is stratified, direct comparison within strata is carried out.

None.