Consumer price index
The consumer price index (CPI) expresses the change in the prices of consumer goods and services.
In order to calculate the consumer price index, it is first necessary to identify what an average private consumer regularly buys. The expenditures are then categorised according to the Classification of Individual Consumption According to Purpose, and shares in the total index, called index weights, are calculated. For the calculation of the index, it is also necessary to choose the goods and services for which price changes will be monitored. These are called representative goods. Then, it is decided how the prices are collected and used for the calculation of the consumer price index.
Statistics Estonia updates the consumer price index weights and the list of representative goods annually. The weights correspond to the average expenditure structure of the population in the previous year. The basis for the calculation is ‘December of the previous year = 100’.
Prices of goods and services are recorded in ten Estonian cities every month. The reference period is the week including the 15th day of the month.
According to the current classification, expenditure is divided into 12 main groups. In order to allow comparisons over time, we continue to publish the consumer price index on the basis 1997 = 100. The index is published on the fifth working day of each month for the preceding month.
The consumer price index is widely used to update various contractual fees as well as to adjust pensions and wages.
Due to the changes in prices the purchasing power of money increases or decreases. The purchasing power calculator enables to compare the purchasing power of any sum of money (income, wages, savings, etc.) in different years.
I enter my income in 2009 (9,000 kroons) and receive the answer what is the sum with the equivalent purchasing power in 2011 (622 euros). The comparison of sums enables to make conclusions about the changes in the purchasing power of the income.
I saved 200 euros in 2005. For 2011 the purchasing power of this sum has decreased as the sum of savings with the same purchasing power would be 265 euros in 2011.