Commodity basket and weight structure of the Consumer Price Index for 2023 have been updated

Commodity basket

The calculation of the Consumer Price Index is based on a commodity basket that is updated annually along with changes taking place in consumption. New commodities are added to the commodity basket if their annual consumption value is at least one per mil of total consumption. Correspondingly, commodities whose value share has fallen under one per mil of total consumption are removed from the commodity basket. With the help of the annually updated commodity basket, the inclusion of representative products and services in the Index is ensured.

From the beginning of 2023, the following commodities were added to the commodity basket:

sugar-free energy drink

non-alcoholic beer

plumbing service

storage services

Due to low consumption, only schoolbooks were removed from the commodity basket of 2023.

Weight structure

According to EU guidelines, the weight structure of the Consumer Price Index 2023 is based on national accounts calculations on private consumption expenditure. Private consumption expenditure for 2022 calculated by the national accounts by quarter forms the basis for the weight structure of the Consumer Price Index.

In the weight structure of the Consumer Price Index, the total value of private consumption was about EUR 127 billion in 2022, while it was around EUR 114 billion in 2021. The year-on-year change in private consumption expenditure was 11.4 per cent.

Private consumption expenditure in national accounts is divided by purpose of use category, of which 4-digit and 5-digit purpose of use categories are taken into account when defining the weight structure of the Consumer Price Index. The weight structure of the sub-categories (6-digit and 7-digit categories) is estimated on the basis of other reliable sources, such as the cost structure of the Household Budget Survey, other statistical data of producers of Official Statistics of Finland (OSF) and sales data of central retail corporations and organisations.

Figure shows the distribution of private consumption by main commodity group for the statistical reference year 2023. The figure covers the products and services used for private consumption.

Over one-half of private consumption is directed at housing, food, non-alcoholic beverages and transport. The least is consumed on education, which is free of charge in Finland, including upper secondary education and textbooks. The consumption share of communication, incl. mobile phone services and Internet subscription charges, is also relatively low, 2.6 per cent of total consumption.

A long-term examination shows how the consumption shares have changed over the decades.

Measured in percentages, the consumption share has increased most compared to 2015 in group 04 Housing, water, electricity, gas and other fuels, whose share of total consumption is already 27.3 per cent. The change from 2015 amounts to 6.0 percentage points. By contrast, the consumption expenditure shares of the following groups have fallen from 2015 as follows:

03 Clothing and footwear (-1.1 percentage points)

09 Recreation and culture (-2.2 percentage points)

07 Transport (-2.1 percentage points)

01 Food and non-alcoholic beverages (-1.1 percentage points)

When compared in the short term, the consumption of transport has fallen most from the year before, by 8.1 per cent.

Data collection

In recent years, the data collection for the Consumer Price Index has increasingly focused on collecting Internet prices. The change in the price collection method does not affect price development because as a rule, enterprises publish the same prices on the Internet that they have on retail store shelves. The price collection is supplemented with data extracted from other sources (e.g. other statistics and big data). Big data are obtained directly from enterprises' information systems and they cover data related to product identification and the selling of consumer products sold in the past month.

Classification of Individual Consumption According to Purpose

In the definition of commodities, the commodity classification introduced in 2016 is used (eCOICOP, European Classification of Individual Consumption According to Purpose), which is based on the UN’s Classification of Individual Consumption According to Purpose. In accordance with EU guidelines, the commodities are divided into 5-digit level sub-groups, with the help of which the products and services are separated into own commodity groups. The Finnish national classification specifies the EU classification with 6-digit and 7-digit commodity groups. The sub-division is revised annually when new commodities are added to the commodity basket or removed from it.

Weight structure of the Harmonised Index of Consumer Prices is also updated every year

Statistics Finland has also updated the weight structure of the Harmonised Index of Consumer Prices calculated for Eurostat, the Statistical Office of the European Union. Its base year is the same as that of the national Consumer Price Index, 2015=100.

The Harmonised Indices of Consumer Prices are primarily used in price comparisons between the EU countries. The European Central Bank uses the Harmonised Index of Consumer Prices as the measure of inflation in its monetary policy.

The Finnish Harmonised Index of Consumer Prices is mainly based on the same weight and price data as the national Consumer Price Index, but its commodity selection is narrower. It does not include owner-occupancy, games of chance, interests and tax-like payments. The Harmonised Index of Consumer Prices covers 85.6 per cent of the national Consumer Price Index.

The biggest change in the consumption share of items excluded from the Harmonised Index of Consumer Prices concerns interests on consumer credit, the share of which grew by good 29 per cent from 2022. This is due to several raises of interest rates by the European Central Bank in the course of 2022.