Real change in transport prices by mode

Indicator Specification
Indicator codes: TERM 020
Created 21 Aug 2007 Published 15 Sep 2010 Last modified 31 Aug 2016, 12:25 PM
Topics: ,
This indicator looks at real price indices of passenger transport based on a fixed transport product in the EU-28 Member States, relative to an average consumer price index; the Harmonised Indices of Consumer Prices (HICPs). HICPs give comparable measures of inflation for the countries and country groups for which they are produced. They are economic indicators that measure change over time of the prices of the consumer goods and services acquired by households. In other words, they are a set of consumer price indices (CPIs) calculated according to a harmonised approach and a single set of definitions. In particular, HICPs provide the official measure of consumer price inflation in the Euro zone for the purposes of monetary policy and the assessment of inflation convergence, as required under the Maastricht criteria.

Rationale

Justification for indicator selection

Transport prices are important drivers of individual and business transport decisions. They affect transport growth and modal split development, and can also lead to changes in distribution management, location decisions and spatial planning.

On the one hand, the prices of transport services are the result of autonomous market developments such as vehicle and logistics technology. On the other hand, they are influenced by government interventions such as taxation, infrastructure provision, regulation and subsidies. Through these interventions, governments can generate price levels that reflect the external costs associated with different forms of transport. This may result in a shift between modes. Monitoring changes in transport prices by mode is a relevant variable to assess whether or not the system is providing economic incentives for a modal shift.

Scientific references

Indicator definition

This indicator looks at real price indices of passenger transport based on a fixed transport product in the EU-28 Member States, relative to an average consumer price index; the Harmonised Indices of Consumer Prices (HICPs).

HICPs give comparable measures of inflation for the countries and country groups for which they are produced. They are economic indicators that measure change over time of the prices of the consumer goods and services acquired by households. In other words, they are a set of consumer price indices (CPIs) calculated according to a harmonised approach and a single set of definitions.

In particular, HICPs provide the official measure of consumer price inflation in the Euro zone for the purposes of monetary policy and the assessment of inflation convergence, as required under the Maastricht criteria.

Units

Price indices are used taking 2005 as a reference point, i.e. 2005 = 100. All indices are relative to the overall consumer price index (HICP), CP00. However for the freight case study, a reference point of 2010 = 100 is used. 

Policy context and targets

Context description

According to the 2011 Transport White Paper, 30 % of road freight transported over more than 300 km should shift to other modes such as rail or waterborne transport by 2030, and more than 50 % should shift by 2050. As for passenger transport, most medium-distance passenger transport should travel by rail by 2050. In the context of the predicted significant growth in transport demand, measures are needed to achieve the above aim.

The cost of transport reflects market changes such as vehicle technology developments, international energy price evolution and state interventions through regulations, subsidies and taxation (see TERM 21). Government actions can internalise the environmental externalities of different transport modes, which can lead to users shifting between modes. The economic incentives for modal shifts can be monitored through the indicator on transport prices by mode.


Targets

No targets currently exist for transport user prices in the (liberalised) transport market. However, by applying fair and efficient pricing, the balance between transport modes may be affected, since the level of externalities and the room for improvement may differ between modes. The 2011 Transport White Paper wishes to further promote the attractiveness of non-road modes through a two-pronged strategy: first, to confront all modes with their full costs (including the costs of negative externalities); and second, to directly improve the market conditions in non-road modes.

Related policy documents

Key policy question

Are passenger transport prices increasing at a higher rate than consumer prices?

Specific policy question

Are freight transport prices increasing?

Methodology

Methodology for indicator calculation

Data on transport prices are collected annually from individual member states by EUROSTAT. The Harmonised Indices of Consumer Prices (HICPs) are used – a comparable index of consumer prices produced by each EU Member State. They are calculated according to a harmonised approach and a single set of definitions, and they provide an official measure of consumer price inflation in the Euro-zone for the purposes of monetary policy.

Methodology for gap filling

 No gap filling was used in the development of this indicator.

Methodology references

No methodology references available.

Data specifications

EEA data references

  • No datasets have been specified here.

Data sources in latest figures

Uncertainties

Methodology uncertainty

No uncertainty has been specified

Data sets uncertainty

The accuracy of HICP is generally considered to be high. The accuracy of source data is monitored by assessing the methodological soundness of price and weight sources, and the adherence to the methodological recommendations. There is a variety of data sources, both for weights (National Account data, Household Budget Survey data, etc.) and prices (visits to local retailers and service providers, and central collection via mail, telephone, e-mail and the internet are used). The type of survey and the price collection methods ensure sufficient coverage and timeliness. The outlets, from which prices are collected, are chosen to represent the existing trade and services network and are usually based on three main criteria: (i) popularity with consumers, (ii) significant turnover from consumer sales, and (iii) availability of goods and services included in the HICP basket. All the private households in the economic territory of the country are covered, whether resident or not and irrespective of their income.

Furthermore, Eurostat and the EU Member States are actively following up an Action Plan concerning quality adjustment and sampling issues. Concrete best practices have been agreed for a range of specific goods and services (in particular cars, consumer durables, books and CDs, clothing and computers).

The HICP does not capture changes caused by market shifts from one product to another of higher (or lower) quality. In particular, the increasing market share of low-cost air carriers for passenger travel does not put downward pressure on the price index. This issue is likely to have a significant impact on demand.

The method used by the UK to re-reference to the index to 2005=100 differs from that used by all other EU and EEA countries. The difference is that the UK has used non-rounded index levels for rescaling, and computed inflation rates from the non-rounded and re-referenced index series.

Rationale uncertainty

No uncertainty has been specified

Further work

Short term work

Work specified here requires to be completed within 1 year from now.

Long term work

Work specified here will require more than 1 year (from now) to be completed.

General metadata

Responsibility and ownership

EEA Contact Info

Diana Vedlugaite

Ownership

European Environment Agency (EEA)

Identification

Indicator code
TERM 020
Specification
Version id: 1
Primary theme: Transport Transport

Permalinks

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Frequency of updates

Updates are scheduled once per year

Classification

DPSIR: Driving force
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
European Environment Agency (EEA)
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1050 Copenhagen K
Denmark
Phone: +45 3336 7100