The weight revision in April 2005

The CPI in April is rebased founded on a three year average of household expenditures for the years 2001-2003 collected in the Household Expenditure Survey. Because of the yearly rebasing there are no substantial changes in expenditures between the years.

The main changes in the composition of the expenditures are in owner occupied housing where the expenditure share increased from 14.3% to 15.2%, mainly because of higher house prices. The share of food and non alcoholic beverages decreased slightly, from 14.6% to 14.4%. The expenditure share of transport lowered from 14.4% to 13.2% mainly because of the decrease in the import of new cars in the three years period covered.

The revision of the weights for groceries is based on expenditures in the years 2002-2004. Because of the increased share of low price stores in this period this revision led to a lowering of the CPI by 0.03% in April. Revision of other expenditures in the index does not influence the price measurement in April.

Since the system changes in the loan markets in July 2004 lower real interest rates used in the calculation of owner occupied housing has led to a nearly 0.4% lowering of the CPI. In July 2004 there was a direct change in the real interest rates lowering the CPI by 0.17%. The variable real interest rates, used to calculate the five years moving average, led to an additional 0.14% lowering of the CPI in the period from August 2004 to April 2005.

In connection with the rebasing of the CPI the composition of the variable real interest rates were revised, taking into consideration that existing mortages are exchanged with new mortages when a property is purchased, leading to a 0.07% lowering of the CPI in April.