Consumer price behaviour in Luxembourg: evidence from micro CPI data

Arbeitspapier

This paper uses micro-level price data and analyses the behaviour of consumer prices in Luxembourg. We find that the median duration of consumer prices is roughly 8 months. The median durations of energy and unprocessed food are about 1.5 and 5 months, while prices of services typically change fewer than once a year. For some product types, such as non-energy industrial goods and processed food, a relatively large share of the observed price changes is reverted afterwards. With the exception of services, individual prices do not show signs of downward rigidity. On average, price decreases are as large as price increases. Price changes are determined both by state- and time-dependent factors. Accumulated price and wage inflation, wage adjustment due to indexation, the cash changeover and a larger number of competitors increase the probability of a price change, while pricing at attractive pricing points and price regulation have the opposite effect.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 541

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Duration Analysis; Optimal Timing Strategies
• Subject: consumer prices ; price setting ; rigidity ; sales ; wage indexation ; Konsumentenverhalten ; Verbraucherpreisindex ; Luxemburg

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lünnemann, Patrick ; Mathä, Thomas Y.
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/152975
• Last update: 10.03.2025, 11:42 AM CET