This document describes changes to the methodology for calculating the Irish Consumer Price Index (CPI) and Harmonised Index for Consumer Prices (HICP). These changes are for some Non-Energy Industrial Goods (NEIGs). The ECOICOP[1] categories affected are detailed below. It describes the methodology change and the motivation for this change.
| Details of Methodology Change | |
|---|---|
| Items affected |
Non-Energy Industrial Goods
|
| Weight of items affected |
2.6% of Irish CPI 2.8% of Irish HICP |
| Date of change | January 2026 |
| Description |
Adjusting quality adjustment methods for replacements. Direct Comparison to be used for most replacements. |
This change affects 46 items in the CPI basket. We will use one of these items, ‘Teapot’, as an example.
The index for Teapot is calculated by pricing the same sample of teapots each month and calculating the relative change in price using a geometric average of the individual price changes. We refer to each of the teapots and its price that month as a product-offer.
A key decision is what to do when a product-offer is no longer available. This involves picking a replacement product-offer and deciding if and how to compare the old and new product-offers. The problem of how to calculate the change of price between the old and new product-offer when we make a replacement is known as Quality Adjustment. There are different methods of quality adjustment and it is important to choose the method most suitable to the item being priced.
The method used up to December 2025 for the affected ECOICOP works as follows:
When a specific teapot priced in a retail outlet is no longer available, a replacement teapot from the same retail outlet is chosen. The person choosing this replacement then decides whether the replacement is comparable or non-comparable to the teapot being replaced.
If they decide the replacement is comparable then the price change between the price of the replacement and the last price of the teapot replaced is included in the geometric average calculations. If the replacement is non-comparable then the price change between it and the teapot being replaced is excluded from the calculations. These two options correspond to the quality adjustment methods Direct Comparison and Bridged Overlap respectively.
Direct comparison has been used less than half the time for these ECOICOP. For example, in December 2025, direct comparison was used 40% of the time for replacements for these items, and bridged overlap used 60% of the time.
Items in these ECOICOP are often introduced to the market at their full price and leave the market at a sale price. At this point they are replaced in our sample by another item at full price. This pattern is repeated with the replacement. Using bridged overlap with products exhibiting this pattern can lead to a downward bias in the index.
We have divided into categories every item in these ECOICOP. For example, the item Teapot in ECOICOP ‘05.4 Glassware, tableware and household utensils’ will be categorized by branding, composition and capacity. Another example is that the item ‘Double Flat Sheet’ in ECOICOP ’05.2 Household Textiles’ will be categorized by branding, composition and thread count
Then from January 2026, when a product-offer for this item becomes unavailable, its replacement should be chosen from the same category. We will then generally use direct comparison to quality adjust between the replaced and replacement product-offer. We anticipate that this will allow us to use direct comparison for replacements in a large majority of cases (over 90%).
In the remainder of cases, we will decide that the replacement and the replaced product-offer are non-comparable. Here, we will use a form of bridged overlap that uses the pre-sale price of the product-offer being replaced (i.e. not necessarily the last price).
Both changes address the issue with downward bias described above. If a product-offer leaves the market at a sale price, the index will compensate for this either by 1) directly comparing this price with the price of the replacement, or 2) by returning to the pre-sale price of the product-offer being replaced.
The CSO has simulated the effect of these changes on the index over two years, from December 2023 to December 2025. This analysis estimated that if the new methodology had been used in that period, it would have resulted in the following difference in terms of percentage points:
The change in methodology described here will not lead to any revisions to the CPI or HICP.
Once the CPI indices are published, they are never revised.
The HICP can be revised in the case of a mistake or if there is new or improved information. Neither of these is the case with this change in methodology. See the EC Regulation number 1921/2001 for the HICP revisions policy.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32001R1921&from=EN
[1] European Classification of Individual Consumption According to Purpose Version 2 (ECOICOP Ver. 2)