INTRODUCTION

1. Methodological approaches to recording certain types of services in the Consumer Price Index in Belarus Ekaterina Grikhanova, National Statistical Committee of the Republic of Belarus Meeting of the Group of Experts on Consumer Price Indices Geneva, May 26-28, 2014

2. INTRODUCTION Consumer Price Index in Belarus: • has been estimated since 1991 • follows national concept • covers 450 items (more than 50 000 monthly quotations) • is estimated using the COICOP classification • is estimated using the weights derived from the annual Household Budget Survey (additional sources are used as well) – the weights are updated annually • is estimated using the arithmetic Young formula at higher level of aggregation • use of the geometric average at elementary level for the calculation of average prices • implementation of electronic tablets for price collection • creation of the new software for the whole process of CPI estimation starting with price collection to the processing the data at the national level • new items in the CPI basket Improvements made for the last two years

3. THE DISCUSSIBLE ITEMS IN THE BELORUSSIAN CPI Central heating The price per 1m2 (1m3) or the tariff per 1 unit of heat? Hot water supply Electricity Population is billed by the differentiated tariffs Cold water supply and sewerage

4. CENTRAL HEATING AND HOT WATER SUPPLY How the population is billed: Central heating average amount of heating energy consumed per 1m2 of apartment tariff per 1 Gcalorie of heating energy × × Total apartment square (m2) quantity Price for heating of 1m2 of apartment (1m3 of water) average amount of heating energy per 1m3 of hot water consumed Total amount of hot water consumed (m3) × tariff per 1 Gcalorie of heating energy × Hot water supply

5. CENTRAL HEATING AND HOT WATER SUPPLY cont. Price for heating of 1m2 of apartment (1m3 of hot water): (is taken by the NSO of Belarus into CPI estimation) • is regulated by the government, centrally fixed • is increased only by regulation of the Council of Ministers • is increased usually 2-3 times a year tariff per 1 Gcalorie of heating energy • there is only one monopolist supplier of heating energy • population can't influence the amount of the heat to be consumed • population just pays for the amount of heat placed in the bill average amount of heating energy consumed per 1m2 of apartment

6. CENTRAL HEATING: Belstat`s approach Price for heating of 1m2 of apartment (1m3 of hot water): (is taken by the NSO of Belarus into CPI estimation) As the consumption of the heating energy fluctuates monthly depending on the outside temperature and other factors, the following methodology was chosen: to keep the average amount of consumed heat constant for the whole heating season (October-May) to make an adjustment using the actual heating consumption data for the whole heating season in the index for May

7. THE DISSCUSSIBLE ISSUES The arguments of the opponents of Belstat`s methodology : • it should be only the tariff per 1 Gcalorie taken in the measurement for the central heating index in the CPI • Belstat`s approach overestimates inflation • the average consumption of heat is the quantitative factor which reflects the outside temperature and shouldn't be included in inflation estimation Belstat`s point of view: • the consumed service for the population is the heating of 1 m2 of the apartment • the price for the heating of 1 m2 of the apartment should be taken into CPI estimation as the measure of this service • this is the price which population actually pays for the service in their bills

8. ELECTRICITY AND COLD WATER SUPPLY • the tariffs were recently divided according to the amount of consumption of the particular service • there is the “social tariff” for the consumption within the stated norm and the higher tariff for the consumption above the norm • the tariffs for electricity are centrally administered and are the same for the whole territory of the country • municipal authorities settle tariffs for the cold water and sewerage – the tariffs above the stated norm differ in the regions of the country

9. COLD WATER AND SEWERAGE Social tariff within 4.3 m3 4.3 Average monthly consumption of cold water per resident of the apartment Tariff for the consumption above 4.3 m3 > 4.3 Average weighted price per resident of the apartment

10. ELECTRICITY relative share of electricity consumed within the social norm (<150 KWh) × social tariff + relative share of electricity consumed above the social norm (>150 KWh) × higher tariff Average weighted tariff for electricity

11. QUESTION In the case when the average percent of the cold water and electricity consumed above the social norm is relatively small should it be taken into the measurement of inflation? In 2013 about 17% of the purchased cold water were paid with a higher tariff The average amount of the excess consumption of water per resident of the apartment varies from 0.2 m3 to 1.5 m3 in different regions In 2013 about 84% of electricity consumption related to the social norm, and about 16% - above the norm

12. CONCLUSION

13. Thank you for your attention!