Financial Services in Swedish Price Indices

The paper deals with issues that have been found important for the treatment of financial services in Swedish price indices. In particular the definition of the unit transaction for fund and stock-brokering services with charge proportional to transaction value is crucial. Such services have more than a negligible extent in Sweden, also for consumers, and different definitions of the unit transaction could lead to notably different results for the overall index of consumer prices. The definition of the unit transaction has great impact also on a volume index for financial services. Coverage of financial services The Swedish CPI (Consumer Price Index) covers insurance services since 1993 and partially banking services since a few years later. The HICP (Harmonised Index of Consumer Prices) for Sweden also covers those services except building insurance, and since 2001 the HICP furthermore covers stock-brokering and fund services. The treatment in the CPI was basically designed by Lönnqvist (1992) and is described by Statistics Sweden (2001). Presently a Swedish Producer Price Index of banking services is being developed. For 2003 the weight of insurance is 0.96 per cent in the national CPI and 0.64 per cent in the HICP, and the weight of banking services etc. is 0.67 per cent in the national CPI and 1.80 per cent in the HICP. Building insurance is covered in the insurance weight of the national CPI but not that of the HICP, while conversely stock-brokering and fund services are covered in the weight of the HICP but not that of the national CPI. It may be noted that the mentioned weights for financial services are not really negligibly small, whence large movements in recorded prices for these services may have a notable impact on the overall indices for Sweden. The present paper focuses on some specific potentially problematic matters of principle which have had to be dealt with and which have also been given consideration in connection to the international harmonisation work for the HICPs and other statistics.