Consumer Price Index is based on control of 491 products

PALMA
THE Consumer Price Index (CPI) is the indicator which is most used to calculate the rate of inflation in the economy by taking into account the changes in cost of an average basket of shopping.

To do this, a base year is chosen to set the price of the basket of shopping and then for every successive year the CPI is calculated by dividing the value of the basket in that year by its value in the base year (multiplied by 100).

The CPI serves as a reference for the negotiation of salaries, the establishment of contracts and the review of pensions and other income. It is also used as a tool to determine the forecasts and future decisions of numerous economic agents.

This phenomenon is a measure of how much workers and pensioners are losing if their income does not rise.
In practice, the basket of goods and consumer services, whose price variation is measured by the Continuous Family Budget Poll, which the National Institute of Statistics (INE) publishes, offers data about family spending on consumer goods and services using a representative sample from some 8'000 households. For each item in the basket the proportion of expenditure is calculated as a portion of the total expenditure.

The new CPI, based on the year 2006, which has been available from the INE since January 2007, has had its geographical representation increased via the inclusion of other towns in the sample (177 towns now as opposed to the 141 used as a base in 2001) and the number of prices included has also risen to around 220'000 (an increase of around 12 percent). The number of products included is 491.

In the Balearics, the four interviewers from the INE, whose job it is to collect information to make up the Consumer Price Index, count prices throughout the Balearics, except those on Formentera. At times this team of interviewers take on more people depending on their needs, according to the National Institute of Statistics' delegate to the Balearics, Joan Pons.

In fact, the interviewers collect information on prices in the city of Palma and the towns of Inca, Manacor and Marratxi on Majorca, in Mahon on Minorca, and on Ibiza.

Some of the changes to the basket of shopping are as follows.
Beef will now be represented by veal as “the consumption of beef has diminished over time”.
Services related to homeopathy and physiotherapy, and cosmetic surgery of operations for short sightedness will now be included. These replace other similar services.