(AGENPARL) – mar 07 giugno 2022 ago. However, the health emergency hit just before the scheduled date and we had to change
The issues that will be discussed during the next few days are, of course, the centre of
attention of consumer price experts and central bankers. Many of these issues, however,
are also of great interest to the public at large, such as how to account for new consumption
measures of the cost of living, especially ones encompassing housing costs. This, I think,
Much more than economics and statistics, of course, have changed because of the
Covid-19 pandemic: our health and that of our loved ones, our housing needs, our way
of working, our consumption patterns, our social relationships. All of these, however, have
policy makers have had to change the way they approach, and perhaps even the way they
think about, economic facts; the full impact will only become clear over time.
Certain features of the recession triggered by the health emergency were in fact
and, moreover, one that was due entirely to a mandated lockdown (plus further limitations
to mobility due to people’s subjective fear of infection). Well,
entirely, to be sure:
but the traditional factors (expectations, demand, real interest rates), the ones that usually
forecasters. Forecasting is always tough, but the Covid-19 crisis has made this job even harder.
of this magnitude; with even just a modicum of nonlinearities, predictions were bound to fail.
Second, consider a fact the possibility of which simply had not occurred to anyone: services
were hit much harder than manufacturing, usually the most cyclical sector. I could go on and
recessions.
However, in my view, the most important fact by far is the one that I have already mentioned:
that this time, the sudden halt in the economy was due almost entirely to extra-economic,
explicit constraints. This is why many forecasters, drawing on the experience of past
recessions and using quantitative models trained on them, underestimated the resilience
green, cars move. If your predictions are based on sophisticated models that have never
to put red lights into standard models by way of ad-hoc dummies and add-ons. In fact, as
restrictive measures were lifted, economic activity resumed instantly in many sectors, not
novel constraints it imposed on data collection. Especially in the initial stages of the crisis,
the lack of good quality and timely data was a key source of uncertainty. It made it hard
to assess current economic conditions and track the economy in real time. The production
traditional means.
physically going to the points of sale to record actual prices was, more often than not, out
of the question. For certain components of the index, moreover, there were actually no
exchanges taking place. Many prices had to be imputed for an extended period of time: in
April 2020, the share of imputed prices was 32 per cent in the euro area, and as much as
broad categories. A substantial share of the items included in the consumer price index
were from sectors which were either de jure or de facto inactive, such as tourism, recreation
or air travel. By contrast, consumption of other goods and services increased. A notable
example was food, whose prices surged in the euro area, because of diverted demand,
hoarding and (occasionally frantic) precautionary buying. The question was, to what extent
Eurostat issued new guidelines requiring the national statistical institutes to update the HICP weights
for 2021 based on information for 2020, contrary to the standard practice of updating by relying on
banks, proved to be rather creative and resilient. Technology was an ally, notably in
Notably, new price data sources, such as scanner data and web-scraping, are now
increasingly used to compile consumer price indices. With hindsight, one wonders
why statisticians had not done much more of that before. Challenges remain, like the
statistical standards of quality. None is necessarily unsurmountable, however; my
impression is that the world of price statistics has now changed for good, and that the
Right in the middle of the pandemic, moreover, the ECB conducted its strategy review,
which it concluded in July 2021. The reason why I mention it in this context is that a key
point of the strategy review was re-thinking the price reference, and that might have
harmonised index of consumer prices, or HICP, remains the appropriate price measure.
However, it did recommend that an extended HICP should be computed over time, to
account for owner-occupied housing (OOH). Let me emphasise the phrase ‘over time’.
Some time will actually be required to construct such a harmonised index. As this
audience knows very well, the issue of incorporating OOH into the HICP (yes, we speak
desirable for representativeness and cross-country comparability, but at the same time
it faces non-trivial implementation challenges. Currently, there is considerable cross-
and all approaches have their pros and cons. More analysis and exchange of views on
Moreover, the implementation of any new price index incorporating OOH needs to be
well managed. In particular, information should be communicated carefully as the existing
Integrating OOH into the consumer price index is not the only challenge for price
statisticians beyond the pandemic. Several other key issues are linked to technological
The rental equivalence approach matches up the characteristics of the owner-occupied housing
stock with equivalent rental properties and calculates what it would cost, at current rental prices,
costs associated with the household sector acquiring new residential housing. Implementations of
sector including self-builds, spending on major renovations and repairs and the various service costs
On the other hand, I see the growth in e-commerce as an opportunity, as well as a
innovative trade channels, and this is indeed a problem. But the solution(s), if smart and
creative enough, might lead to data collection techniques that are at the same time more
I do see that many of these challenges appear in the programme of this workshop, and
In talking about prices these days, one cannot overlook the issue of the sudden increase
Over the past few months, the euro area has witnessed a rise in energy prices that can
only be compared with the oil shocks of the 1970s. The price of natural gas has seen the
Initially, the increase was largely due to idiosyncratic factors and pent-up demand in the
aftermath of the pandemic, which caused bottlenecks in shipping, and other input-related
bottlenecks. Since the end of last year, however, the surge in energy prices has mainly
been due to the escalation of geopolitical tensions that culminated, on 24 February, in
the highest value recorded since the Economic and Monetary Union was launched. In
5 percentage points of the increase in the HICP can be directly attributed to the
that energy prices also had an indirect impact, as they are now starting
to pass through to services and goods, though only partially and rather slowly for
the moment. For example, 2.4 percentage points of the 7.5 per cent euro-area food
points out of 6.5).
Corsello and Tagliabracci (2022).
Among Italian companies included in the latest wave of our quarterly Survey on
Governments in several euro-area countries adopted measures to cushion the impact
Sizeable funds have also been allocated to
While most governments have understandably tried to mitigate the immediate impact
of exceptionally high increases in energy prices, I think that it is important to keep in
mind that relative prices are a key factor in steering our economies away from fossil fuels
and climate transition. Looking ahead, it is worth considering measures that would at
at the same time preserving as much as possible of the price signal to both households
Households’ decisions in terms of consumption and savings ultimately depend on real
Thus, it is crucial for a central bank to monitor these expectations, as a precondition to
upward bias could partly be due to the way data on households’ beliefs are gathered.
longstanding Survey on Household Income and Wealth, we use probabilistic questions
Tagliabracci (2022).
Corsello and Riggi (2022) and Curci, Savegnago, Zevi and Zizza (2022).
horizons, and own selling price changes. We see this survey as particularly valuable