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    INE changes the way it measures gas and electricity prices

    January 31, 2023 - CE Noticias Financieras


      It is a reform that comes a year late and dragging controversies. The INE has incorporated the free market for both electricity and gas into its calculations for the consumer price index (CPI). Until now, these consumers, who account for 60% of the total in the case of electricity, and who have the most stable prices, were not included in the CPI calculation.

      It should be borne in mind that during the energy crisis, the regulated electricity tariff rose much higher than that of the free market, with longer duration contracts. Subsequently, with the entry into operation of the Iberian mechanism, the price of the regulated tariff has gone down and the free market contracts, when they came up for renewal, increased their prices.

      These are changes that have not been made before, according to the INE, because it did not have detailed information from the companies to incorporate these contracts into the measurement.

      In February, a report by CaixaBank Research stated that the CPI was "clearly biased upwards in 2021" due to this omission. INE quickly responded with an institutional communiqué in which it defended that the CPI was "an indicator based on a clear and precise methodology", and that the published index had all the guarantees. It added that they were working with the sector to incorporate the free market. Finally, the necessary information arrived that allows, from January 1, to incorporate these free market contracts. A change that, says the INE, has the backing of Eurostat, the EU statistics office.

      The second change carried out by INE is that the main source for the calculation of the weights is now the National Accounts (NC), instead of the Household Budget Survey (HBS), as before. In this way, new weights are introduced in the basket to calculate the CPI. María Jesús Fernández, from Funcas, considers that "the upturn in inflation has had to do with the change in the weightings of the shopping basket".

      According to Funcas calculations, with the old weightings, the result would have been a lower inflation this January, 5.3% for general inflation and 6.9% for core inflation. In the new weighting, food and non-alcoholic beverages lose weight, from 22.6% of the total to 19.6%, as well as housing, clothing and footwear. On the other hand, alcoholic beverages and tobacco, and transport, gained weight.


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