Acta Oeconomica
Volume/Issue:
Volume 73: Issue 3
Inflation measurement in times of large consumption shifts – Evidence of the CPI bias from Poland
Authors:
Aleksandra Hałka Narodowy Bank Polski, Warsaw, Poland

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Agnieszka Leszczyńska-Paczesna Faculty of Economics and Sociology, University of Lodz, Rewolucji 1905 r. 41, 90-214 Lodz, Poland

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https://orcid.org/0000-0002-4671-7168
Pages:
383–401
Online Publication Date:
25 Sep 2023
Publication Date:
25 Sep 2023
Article Category:
Research Article
DOI:
https://doi.org/10.1556/032.2023.00022
Keywords:
inflation; CPI bias; Laspeyres index; Fisher index; democratic index; consumption structure; COVID-19;
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Abstract

The paper addresses the problem of inflation measurement and the way it is affected by the choice of CPI weights. We focus on the bias resulting from using weights reflecting the past structure of consumption and the choice of the plutocratic index. The study is based on a comparison of the official consumer price index in Poland with superlative indices. Contrary to most literature, our findings indicate an understatement of the CPI. Additionally, in 2020 due to large changes in the pattern of household consumption, the underestimation increased. This results from the increase in the expenditure on the relatively more expensive goods which could not be accounted for in real time. In general, the lack of overstatement in the Polish CPI may result from frequent adjustments in the weights used for the calculation of CPI and a faster-than-CPI rise in the prices of those goods and services for which demand is relatively inelastic. Additionally, we deliver the estimates of the plutocratic gap, which indicates that the use of the plutocratic weights in the calculation of CPI leads to a lower price index than its democratic equivalent.

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Cover Acta Oeconomica
Acta Oeconomica Periodical of the Hungarian Academy of Sciences
Print ISSN:
0001-6373
Online ISSN:
1588-2659
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Acta Oeconomica
Language English
Size B5
Year of
Foundation		 1966
Volumes
per Year		 1
Issues
per Year		 4
Founder Magyar Tudományos Akadémia
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Address		 H-1051 Budapest, Hungary, Széchenyi István tér 9.
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ISSN 0001-6373 (Print)
ISSN 1588-2659 (Online)

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