How do the choice of weight structure and update frequency affect the official measurement of price development in Sweden and how robust is the Consumer Price Index (CPI) when alternative weighting schemes are applied?

Sammanfattning

This thesis examines how methodological choices in the construction of the Swedish Consumer Price Index (CPI), in particular the structure and updating of expenditure weights, affect measured consumer price inflation. Using monthly data from Statistics Sweden over 1980-2025, we compare the official CPI with several counterfactual CPI constructions: fixed expenditure weights (e.g., 1980, 1993, 2005 and 2025), CPI with five-yearly weight updates and CPI series constructed using EU Harmonised Index of Consumer Prices (HICP) expenditure weights. We also compare CPI with CPIF and producer prices to illustrate how index design and aggregation influence measured inflation and its interpretation.The results show that the official CPI consistently implies lower cumulative price growth than all alternative constructions. For example, indexing SEK 10,000 from 1980M01 yields SEK 43,711 by 2025M01 using the official CPI, compared with SEK 50,227 under five-yearly reweighting and SEK 53,418 using fixed 1993 weights. Differences between CPI and CPIF are most pronounced during major interest rate cycles, highlighting the role of housing related interest costs in measured inflation. The findings show that long-run measured inflation depends materially on weight updating and index design choices, with economically meaningful implications for indexation and interpretation.