Luxembourg, February2013 Unit C3 A65/13/06 (= A64/13/xx) 1 Meeting of the Working Group on Article 65 of the Staff Regulations To be held in Luxembourg on 22 March 2013 Bech Building Room "Quetelet" 09.30 a.m. Meeting of the Working Group on Article 64 of the Staff Regulations To be held in Luxembourg on 27 September 2013 Bech Building Room "Ampère" 09.30 a.m. Eurostat Report on the Annual Adjustment of Remuneration and pensions 2012, document SWD(2012)427 Complementary explanations regarding the Brussels International Index, June 2011-2012 A65WG Agenda item 6.3 A64WG Agenda item X.X 1 As agreed at the 2008 working party meeting, this presentation of BII results is now made at both the A64 and the A65 meetings
Contents 1. Introduction... 1 2. The calculation... 1 3. The results... 2 4. Comparison with HICP... 3 5. Comparison with Brussels CPI... 4 6. Time series since 2003...4 7. Conclusions... 6 1. Introduction Article 64 and Annex XI of the Staff Regulations require Eurostat to regularly draw up an index to measure the changes in the cost of living for EU officials in Brussels. This index is known as the Brussels International Index (BII) and reflects changes in price levels between June of the previous year and June of the current year, according to a methodology defined by the Article 64 Working Group. This paper describes the calculation and presents the result for the annual adjustment to July 2012. Results for the intermediate adjustment for the six month period to December 2012 will be presented in a separate document at the meeting (ref. Doc.A65/13/13 = Doc.A64/13/xx) which can only be established once they have been calculated. 2. The calculation Since 2004, the following price indices are used to establish the BII: 1) For all basic headings except those relating to accommodation rental (ie. 78 of the 80 basic headings): a) Firstly, the relevant sub-index of the Belgian harmonised index of consumer prices (HICP) is applied, as published on the Eurostat website. b) There are a number of basic headings where the specific evolution of price level in Brussels is considered to differ significantly from the situation for the country as a whole. For these, the HICP sub-index is replaced by the relevant sub-index from the Brusselsspecific national consumer price index. This information is provided by the "Service public fédéral, Economie, P.M.E., Classes moyennes et Energie, division des prix" (Federal Public Service of Belgium, Economy, Small and medium-sized enterprises, Middle classes and Energy, Price indices department). The 9 basic headings concerned are: o Water supply o Electricity o Gas o Other services in respect of personal transport equipment o Passenger transport by road o Combined passenger transport - 1 -
o o o Restaurants, cafes and the like Accommodation services Hairdressing salons and personal grooming establishments This list was reviewed in 2011 and again in 2012 2, however no continuous significant differences were identified and no changes have been implemented. 2) For 2 basic headings, namely accommodation costs of tenants (actual rents) and of owneroccupiers (imputed rents), information is directly obtained from the annual Brussels Staff Housing Survey coordinated by Eurostat. These 80 price indices are then aggregated using weights derived from the latest of the periodic Survey of Household Expenditures conducted amongst EU staff in Brussels (2009). 3. The results For 2012, the rents price index is 103.5 (base July 2011 = 100). For details of the calculation of this index, see the separate paper on the 2011 Staff Housing Survey (Doc.A64/13/xx). The following table presents the index values for June 2012 with comparative information for June 2011, base 2005 =100. The variation between these two indices is the Brussels International Index applicable for the current exercise. The overall index value is +2.8%. Brussels International Index, 2005=100 SHE weights 2009 Rents from SHS SHE INDICES INDICES WEIGHTS Jun-2011 Jun-2012 VARIATION 1 FOOD AND NON-ALCOHOLIC BEVERAGES 128.2 119.5 122.7 102.7 2 ALCOHOLIC BEVERAGES AND TOBACCO 20.3 112.2 114.4 102.0 3 CLOTHING AND FOOTWEAR 54.3 109.5 111.0 101.4 4 HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 297.6 109.0 113.2 103.9 5 FURNISHINGS, HOUSEHOLD EQUIPMENT AND MAINTENANCE OF HOUSE 74.7 111.1 112.9 101.6 6 HEALTH 19.2 101.3 101.9 100.6 7 TRANSPORT 127.2 111.2 113.5 102.0 8 COMMUNICATIONS 21.5 91.3 90.0 98.5 9 RECREATION AND CULTURE 91.7 100.9 104.1 103.2 10 EDUCATION 14.7 111.7 115.1 103.0 11 HOTELS, CAFES AND RESTAURANTS 100.6 119.9 123.2 102.8 12 MISCELLANEOUS GOODS AND SERVICES 50.0 119.6 124.0 103.7 TOTAL WITHOUT RENTS 762.9 114.8 117.7 102.6 RENTS 237.1 100.0 103.5 103.5 TOTAL 1000.0 111.3 114.4 102.8 2 Possible additional headings that were considered for substitution were: o Refuse and sewerage collection, other services related to dwelling o Other purchased transport services o Equipment for the reception, recording and reproduction of sound and pictures o Equipment for sport, camping and open-air recreation o Gardens, plants and flowers - 2 -
4. Comparison with HICP The following table presents the published HICP values for June 2012 and June 2011, base 2005 = 100, and the right-hand column again shows the variation for the period, +2.2%. Belgian HICP index, 2005=100 HICP weights Rents from HICP WEIGHTS INDICES WEIGHTS INDICES from HICP 2011 01/06/2011 from HICP 2012 01/06/2012 VARIATION 1 FOOD AND NON-ALCOHOLIC BEVERAGES 171.9 119.4 167.1 122.8 102.8 2 ALCOHOLIC BEVERAGES AND TOBACCO 46.8 116.0 43.5 119.2 102.8 3 CLOTHING AND FOOTWEAR 59.8 108.7 66.0 110.0 101.2 4 HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 140.9 131.3 145.7 134.1 102.1 5 FURNISHINGS, HOUSEHOLD EQUIPMENT AND MAINTENANCE OF HOUSE 72.4 111.5 69.4 113.6 101.9 6 HEALTH 36.9 101.3 48.9 101.9 100.6 7 TRANSPORT 147.1 118.2 140.7 120.0 101.5 8 COMMUNICATIONS 29.3 90.8 25.5 89.2 98.2 9 RECREATION AND CULTURE 113.6 106.3 99.1 109.1 102.6 10 EDUCATION 6.4 111.7 5.9 115.1 103.0 11 HOTELS, CAFES AND RESTAURANTS 83.1 118.0 76.6 121.4 102.9 12 MISCELLANEOUS GOODS AND SERVICES 91.8 117.1 111.6 120.9 103.3 TOTAL WITHOUT RENTS 952.9 116.0 957.7 118.5 102.2 RENTS 47.1 110.3 42.3 112.0 101.5 TOTAL 1000.0 115.7 1000.0 118.2 102.2 Overall, the BII for the year to June 2012 (102.8) is 0.6 points higher than the HICP for the same period (102.2). By comparing the results at the level of the 12 main COICOP groups, reasons for the difference in the value of the overall index can be identified. The table below summarises the principal differences. The first column and the penultimate column are taken from the tables in sections 3 and 4. The final column shows the total difference. The second and fourth columns show the weights component and prices component of the total difference. Note: in this analysis, the impact of differing numbers of underlying basic headings and different aggregation approaches is not considered. Variation between Brussels International Index, 2005=100 and Belgian HICP index, 2005=100 BII uses SHE weights 2009 and HICP uses HICP weights BII uses Rents from SHS Impact of total Period 2011m6 to 2012m6 HICP Indices new HICP Prices Impact of BII Variation Variation Weights BII Weights new Prices Variation HICP to BII 1 FOOD AND NON-ALCOHOLIC BEVERAGES 102.8-0.1 102.7 0.0 102.7-0.1 2 ALCOHOLIC BEVERAGES AND TOBACCO 102.8-0.9 101.9 0.1 102.0-0.8 3 CLOTHING AND FOOTWEAR 101.2 0.1 101.3 0.1 101.4 0.2 4 HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 102.1-0.2 101.9 2.0 103.9 1.8 5 FURNISHINGS, HOUSEHOLD EQUIPMENT AND MAINTENANCE OF HOUSE 101.9-0.3 101.6 0.0 101.6-0.3 6 HEALTH 100.6 0.0 100.6 0.0 100.6 0.0 7 TRANSPORT 101.5 0.5 102.0 0.0 102.0 0.5 8 COMMUNICATIONS 98.2 0.3 98.5 0.0 98.5 0.3 9 RECREATION AND CULTURE 102.6 0.6 103.2 0.0 103.2 0.6 10 EDUCATION 103.0 0.0 103.0 0.0 103.0 0.0 11 HOTELS, CAFES AND RESTAURANTS 102.9 0.0 102.9-0.1 102.8-0.1 12 MISCELLANEOUS GOODS AND SERVICES 103.3 0.5 103.8-0.1 103.7 0.4 TOTAL WITHOUT RENTS 102.2 0.3 102.5 0.1 102.6 0.4 RENTS 101.5 0.0 101.5 2.0 103.5 2.0 TOTAL 102.2 0.0 102.2 0.6 102.8 0.6-3 -
5. Comparison with Brussels CPI The following table presents the Brussels CPI values 3 for June 2012 and June 2011, base 2005 = 100, and the right-hand column again shows the variation for the period, +2.3%. Note: national weights are used. Brussels CPI, 2005=100 CPI weights Rents from CPI WEIGHTS INDICES WEIGHTS INDICES from CPI 2011 01/06/2011 from CPI 2012 01/06/2012 VARIATION 1 FOOD AND NON-ALCOHOLIC BEVERAGES 175.1 122.1 175.1 125.9 103.1 2 ALCOHOLIC BEVERAGES AND TOBACCO 21.2 112.7 21.2 113.6 100.8 3 CLOTHING AND FOOTWEAR 62.8 107.4 62.8 109.5 102.0 4 HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 158.1 127.0 158.1 130.1 102.4 5 FURNISHINGS, HOUSEHOLD EQUIPMENT AND MAINTENANCE OF HOUSE 73.4 111.0 73.4 112.8 101.6 6 HEALTH 42.8 100.6 42.8 100.8 100.1 7 TRANSPORT 157.3 114.1 157.3 114.3 100.2 8 COMMUNICATIONS 36.9 89.8 36.9 91.4 101.8 9 RECREATION AND CULTURE 125.2 108.8 125.2 113.1 103.9 10 EDUCATION 5.8 115.8 5.8 116.7 100.8 11 HOTELS, CAFES AND RESTAURANTS 70.8 122.4 70.8 125.5 102.5 12 MISCELLANEOUS GOODS AND SERVICES 70.7 117.0 70.7 121.5 103.8 TOTAL WITHOUT RENTS 937.2 116.1 937.2 118.8 102.3 RENTS 62.8 107.7 62.8 109.3 101.4 TOTAL 1000.0 115.5 1000.0 118.2 102.3 Overall, the BII for this period (102.8) is 0.5 points higher than the Brussels CPI for the period (102.3). 6. Time series since 2003 The following table shows the trend of the Brussels International Index since 2003. The cumulative price increase over the period to July 2011 has been +23.9% Measure for increase in cost-of-living- in Brussels * Previous year = 100 2003 = 100 2004 101.9 101.9 2005 102.2 104.1 2006 102.1 106.3 2007 101.4 107.8 2008 104.4 112.6 2009 100.9 113.6 2010 102.4 116.3 2011 103.6 120.5 2012 102.8 123.9 * Brussels International Index (BII) As can be seen from the following two tables, the cumulative increase in the BII is similar to the cumulative increase in the Belgian HICP and the Brussels Consumer Price Index. 3 Aggregates are Eurostat estimates, using national source formatted to match HICP and BII, rebased from 2004. - 4 -
For comparison, the following tables show the trend of the Belgium harmonised index of consumer prices and the Brussels consumer price index. The cumulative price increase over the period to July 2011 has been +23.6% and +23.5% respectively. Measure for increase in cost-of-living- in Belgium * Measure for increase in cost-of-living- in Brussels * Previous year = 100 2003 = 100 Previous year = 100 2003 = 100 2004 102.0 102.0 2004 102.5 102.5 2005 102.7 104.8 2005 102.3 104.9 2006 102.5 107.4 2006 102.3 107.3 2007 101.3 108.8 2007 101.4 108.8 2008 105.8 115.1 2008 105.5 114.8 2009 99.0 113.9 2009 99.3 114.0 2010 102.7 117.0 2010 102.2 116.5 2011 103.4 121.0 2011 103.7 120.8 2012 102.2 123.6 2012 102.3 123.5 * Harmonised Index of Consumer Prices (HICP) * Consumer Price Index (CPI) The following graph shows the difference by comparison to the HICP for each year. 108.0 Brussels International Index (BII) and Belgian Harmonised Index of Consumer Prices (HICP) 106.0 104.0 102.0 101.9 102.0 102.2 102.7 102.1 102.5 101.4 101.3 104.4 105.8 100.9 102.4 102.7 103.6 103.4 102.8 102.2 100.0 99.0 98.0 96.0 94.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 BII HICP From the foregoing graph it is apparent how the index divergence for the period ended July 2008 was reversed in the period ended July 2009. That divergence reflected unusually significant price movements (increases in 2008, then decreases in 2009) for certain goods and services, where the consumption expenditure weights are different for the expatriate EU officials and the national population which magnified the impact. As can easily be seen from the graph, for most years the price movements and their interaction with the weights result in similar index values. - 5 -
7. Conclusions Delegates are invited to comment on the information provided about the Brussels International Index for July 2012. - 6 -