The impact of The impact of Financial Crises on the Financial - - PowerPoint PPT Presentation

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The impact of The impact of Financial Crises on the Financial - - PowerPoint PPT Presentation

The impact of The impact of Financial Crises on the Financial Crises on the CPI CPI R R smundur Gunason, Statistics Iceland smundur Gunason, Statistics Iceland Gur Gur n R. J n R. J nsd nsd ttir ttir , ,


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SLIDE 1

The impact of The impact of Financial Crises on the Financial Crises on the CPI CPI

R Ró ósmundur Guðnason, Statistics Iceland smundur Guðnason, Statistics Iceland Guðr Guðrú ún R. J n R. Jó ónsd nsdó óttir ttir ,

, Statistics Iceland

Statistics Iceland 11 11 th

th meeting of the International Working Group

meeting of the International Working Group

  • n Price Indices (The Ottawa Group),
  • n Price Indices (The Ottawa Group), Neuchâtel

Neuchâtel, , Switzerland, 27 Switzerland, 27-

  • 29 May 2009

29 May 2009

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SLIDE 2

CPI problems in financial crises

  • 1. Unobservable prices
  • Missing prices
  • 2. Fall in Car sales
  • 3. Outlets reduced sample
  • 4. House prices

Fall in sales Non monetary transactions

  • 5. Changes in consumptions patterns
  • 6. Shopping substitution bias
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SLIDE 3

Unobservable prices

  • Does crisis situation lead to the situation that

Does crisis situation lead to the situation that fewer prices will be available fewer prices will be available

  • In October 2008 there was a fear that it would be

In October 2008 there was a fear that it would be

  • It has not been the case, similar supply of goods

It has not been the case, similar supply of goods

  • Is monitored

Is monitored

  • Monthly follow up in the CPI

Monthly follow up in the CPI

  • Grosseries only avaiable prices each month used

Grosseries only avaiable prices each month used

  • More active eplacemant policy

More active eplacemant policy

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SLIDE 4

Fall in car sales

  • In October 2008 car sales came to

In October 2008 car sales came to stop, but list prices changed by 4.1% stop, but list prices changed by 4.1%

  • Price change not taken into account

Price change not taken into account

  • effect on index 0.3%

effect on index 0.3%

  • Price collection method changed

Price collection method changed

  • Prices of cars sold in each month

Prices of cars sold in each month

  • Collected directly from car sellers

Collected directly from car sellers

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SLIDE 5

Price collection method for cars

If method had not been changed:

  • Inflation would have been measured

1.1% higher October 2008 to March 2009.

If cars had been left out of the index

  • Price change would have been 0.13%

higher.

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SLIDE 6

Outlets sample reduced

Crises risk of firms going bankrupt Clothing,10% of outlets disappeared

in October

Stopped after that for clothing shops Home electronic suppliers closed

down

Other suppliers change their

sortiment greatly

Supermarket cain into discount store

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SLIDE 7

House prices

Crises in the housing market

  • sales 11.000 in 2007 to 2.000 in 2009

Fall in sales and missing prices

  • 24% prices either missing or to few

Non monetary payment increasing

  • Nearly 30% of all sales in 2009
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SLIDE 8

Shopping substitution bias

Household shopping behaviour

  • Buying more in low price stores
  • Average prise for the household lower

but prices in the stores might be unchanged

  • Should be taken into account, from the

consumers side

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SLIDE 9

Changes in consumption patterns Changes in consumption patterns

  • Yearly weight revison, continous HES

Yearly weight revison, continous HES results incorporated results incorporated

  • March 2009. HES 2005

March 2009. HES 2005-

  • 2007

2007

  • Known consumptions changes measured

Known consumptions changes measured

  • Cars weight, pacakge tours,

Cars weight, pacakge tours,

  • Shopping buying patterns

Shopping buying patterns

  • Effect of the weight change, March April

Effect of the weight change, March April

  • Price updated weights

Price updated weights -

  • 0.13% lower CPI

0.13% lower CPI

  • Shopping weights

Shopping weights -

  • 0.08% , price increase in

0.08% , price increase in the low price stores the low price stores

  • Shopping substitution

Shopping substitution -

  • 0.12%

0.12%

  • Total effect of weight change

Total effect of weight change -

  • 0.20%

0.20%

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SLIDE 10

Public attitude to statistics

Misconception about CPI

  • Less consumption, is it less inflation

Great pressure on staff –questions Media, tv, radio, press, meetings FAQ to answear most questions

asked