Consumer price index, 15 March 2004

The CPI stood at 113.1 (1998=100) in March this year compared with 113.8 in March last year - a decrease of 0.6 per cent, up from a decrease of 1.7 per cent in February. The price development of electricity has to a large extent dominated the year-to-year change in the consumer prices the past 15 months. Even though the monthly rates of change of electricity have been moderate for some time, the extremely high price level at the beginning of 2003 continues to affect the year-to-year change in the CPI. The CPI excluding electricity has increased by 0.7 per cent during the last 12 months.

Price increase of clothing from February to March

On average, the CPI rose by 0.4 per cent from February to March. The increase was due to several large components in the CPI. Clothing in particular contributed to the growth in the consumer prices. Despite a price increase of 4.0 per cent, the clothing prices is still below the December level. The prices of footwear showed a somewhat more modest price rise of 1.3 per cent.

Prices of petrol and transport services went up by 2.9 and 2.6 per cent respectively from February to March. Among the transport services airline fares increased the most by 3.7 per cent. Prices of passenger transport by road and passenger transport by railway went up as well by 2.8 and 1.4 per cent respectively. As of 1 March 2004 domestic passenger transportation is incorporated in the value added tax system. This implies a value added tax of 6 per cent on final consumption, and a deduction of 24 per cent value added tax on intermediate stages.

Prices of food and non-alcoholic beverages contributed to the rise in the consumer prices as well with an increase of 0.7 per cent from February to March. Costs for owner-occupied housing and rentals for housing went up by 0.3 and 0.2 per cent respectively during the same period.

An increase in the license fee on television was also registered in March. The value added tax on license fee on television introduced last year is reduced from 12 to 6 per cent.

Tariffs on electricity contributed to moderate the growth in the consumer prices from February to March with a decline of 3.9 per cent. Prices of telephone services went down as well.

The CPI adjusted for tax changes (CPI-AT) increased by 0.3 per cent from February to March. The introduction of value added tax on transport services contributed to decrease the CPI-AT, while the tax reduction on license fee on television pulled in the opposite direction. In the CPI-AT and the CPI-ATE only tax changes on final consumption is adjusted.

Year-to-year change: Consumer prices still down

The CPI has fallen by 0.6 per cent from March 2003 to March 2004. Even though the contribution has been reduced, the electricity tariffs are still the one dominating contributor to the decrease in the year-to-year change. The tariffs are in March 21.3 per cent below last year's price level. The growth in the CPI excluding electricity was 0.7 per cent in the same period.

Clothing prices have fallen by a substantial 9.1 per cent the last 12 months while prices of footwear have decreased somewhat less by 7.9 per cent. Prices of audiovisual equipment and airline fares have also contributed to pull the CPI down.

Food prices have increased by 2.9 per cent and thereby dampen the overall price decline. The prices of tobacco also contribute in the same direction as the prices have gone up by 19.4 per cent. Costs for owner-occupied housing and rentals for housing have risen by 2.6 per cent on a year-to-year basis.

Strong price increases of health services and insurance premiums of 8.8 and 5.1 per cent respectively have also been registered.

Strong rise in the year-to-year change

The year-to-year change in the CPI went from a decline of 1.7 per cent in February to a decrease of 0.6 per cent in March. The price development of electricity tariffs explains much of this strong increase. In March last year the prices fell by 14.2 per cent in contrast to a more moderate seasonal price decrease of 3.9 per cent in March this year. Even though the electricity tariffs still are the most important contributor, there are several other contributors as well. The year-to-year growth in the CPI excluding electricity increased from 0.3 per cent in February to 0.7 per cent in March.

Clothing prices increased more in March this year with 4.0 per cent compared with a rise of 0.9 per cent in the same period last year. Prices of both transport services and petrol rose more in March 2004 compared with March last year. Also the price development of food and non-alcoholic beverages and motor cars contributed to the strong price increase.

CPI-AT climbed from a decrease of 2.3 per cent in February to a decline of 1.1 per cent in March. CPI-ATE increased from a fall of 0.1 per cent in February to an increase of 0.3 per cent in March.