Real change in transport prices by mode (TERM 020) - Assessment published Sep 2010
On average over the period 1998 to 2008, passenger transport prices have increased at a higher rate than consumer prices, with the exception of the purchase of passenger cars, and more recently, air travel. For freight transport prices, no EU-wide data exists, but as an example in the UK road freight prices have increased by a small amount over this period.
Are passenger transport prices increasing at a higher rate than consumer prices? Are transport prices givin appropriate signals to transport users?
Real price indices of passenger transport based on a fixed transport product in the EU 25 Member States (2005=100)
Note: Real change in passenger and freight transport prices by mode. On average over the period 1998 to 2008, passenger transport prices have increased at a higher rate than consumer prices, with the exception of the purchase of passenger cars, and more recently, air travel. For freight transport prices, no EU-wide data exists, but as an example in the UK road freight prices have increased by a small amount over this period.
Eurostat - Harmonised Indices of Consumer Prices, Economy and finance (data)/Prices/Harmonised Indices of Consumer Prices (HICP)/ Harmonised Indices of Consumer Prices (2005=100) – Annual Data (Average Index and rate of change).
Prices are relatively easy to measure and compare over time, as long as the product or service in question stays the same. However, there are variations that take place over time that can affect the reliability of the comparison. For example, people tend not to purchase the same cars as ten years ago, and don't use the same package of transport services (price/quality) as previously.
Therefore, only limited conclusions about trends in transport prices can only be drawn. Most care should be taken when interpreting the prices related to the purchasing of cars and air travel prices. The price and quality characteristics of these products have changed the most during the recent years. For example, in air transport, increasing share of travellers are choosing low-cost carriers that offer less service for lower prices.
Transport price indices for the EU-15 Member States show that real (inflation adjusted) passenger transport prices have increased, making transport services more expensive in comparison with other consumer goods and services. Differences appear between countries and modes.
Vehicle purchase prices have grown substantially less than average consumer prices, making it easier for people to afford a car. This may, probably in combination with rising real incomes, have been an important driving force behind the increased vehicle ownership in the EU (see TERM32 Size and Composition of the Vehicle Fleet). Increased vehicle ownership is the primary driver behind increased choice of cars as a transport mode. This often leads to increased transport demand and subsequent environmental pressures as the costs for vehicle use are relatively low and many cost items are fixed (e.g. depreciation, insurance and holder's tax). Similar trends are seen in the newer Member States as greater affordability of car purchases is even more pronounced. However, the effect of the availability of cheaper passenger cars is probably smaller than depicted, as people do not tend to purchase the same types of cars as ten years ago. Instead, households may purchase larger and more luxurious cars, spending an even greater share of their income on vehicle purchase than before (see TERM24 - Expenditures on Personal Mobility).
Air transport prices have been gradually rising since 2000, but since 2005 have begun to decline. In the past, these rises in the price indices have not been regarded as representative due to the growing market share of low-cost airlines and greater competition.
Are freight transport prices increasing?
Real Price UK Freight Price Indices (2005=100)
Note: Case study of the United Kingdom: prices for freight transport on commercial ferries, by road and by sea between 1998 and 2008
UK National Statistics, National Statistics/Services Producer Prices Index (experiemental)/Q1 2009 Data. http://www.statistics.gov.uk/statbase/product.asp?vlnk=7351,
Less information is available regarding freight prices. Using a case study of the United Kingdom, prices for freight transport on commercial ferries and by road have increased over the period 1998 to 2008. Prices for freight transported by sea however have declined over this period (see Figure 2). The cost decreases for water transport are largely a result of economies of scale (larger ships and longer distances).
Indicator specification and metadata
Real price indices of passenger transport based on a fixed transport product in the EU 25 Member States, relative to average consumer price index (HICP).
Harmonized Indices of Consumer Prices (HICPs) give comparable measures of inflation for the countries and country groups for which they are produced. They are economic indicators that measure the change over time of the prices of 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 area for the purposes of monetary policy and the assessment of inflation convergence as required under the Maastricht criteria.
Price indices, 2005 = 100. All indices are relative to the overall consumer price index (HICP), CP00.
Policy context and 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 EC’s 2001 White Paper states that the rights and obligations of users should be recognised, including reinforcing the right to have access to high quality services providing integrated services at affordable prices (EC, 2001).
Transport prices can and should reflect a range of elements, including costs of tackling congestion, the greenhouse gas effect and building infrastructure, whilst also improving safety on the road or in public transport and minimising environmental disturbances. There is also the cost of investment to provide better control of transport, putting new trains on the tracks and building new infrastructure. Therefore the benefits of society and transport users should be reflected more or less in the price users pay for transport, but without affecting access to a good quality, continuous service throughout the Community. The Commission previously concluded that “one of the important reasons why imbalances and inefficiencies have arisen is because transport users have not been adequately confronted with the full costs of their activities … As prices do not reflect the full social cost of transport, demand has been artificially high. If appropriate pricing and infrastructure policies were to be pursued, these inefficiencies would largely disappear over time” (EC, 2001).
Passenger transport in Europe is predicted to grow by about 40 % between 2010 and 2050. With this significant growth in transport use, it is important that prices are monitored to see if users are given appropriate incentives to use more environmentally friendly modes of transport. Changes in transport prices drive individual and business transport decisions; fair and efficient price signals are required.
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 of transport prices by mode.
Related policy documents
COM (2001) 370 final. European transport policy for 2010.
WHITE PAPER European transport policy for 2010: time to decideCOM (2001) 370 final
Methodology for indicator calculation
Transport prices data 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, providing an official measure of consumer price inflation in the euro-zone for the purposes of monetary policy in the euro area.
Methodology for gap filling
No gap filling has been undertaken in the development of this indicator.
No methodology references available.
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 they are based usually on three main criteria: Popularity with consumers, significant turnover from consumer sales and 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 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 2005=100 differs from that used by all other EU and EEA countries in that the UK has used un-rounded index levels for rescaling and computed inflation rates from the unrounded and re-referenced index series.
No uncertainty has been specified
Transport statistics - freight (Eurostat)
provided by Statistical Office of the European Union (Eurostat)
Services producer price indices
provided by Office for National Statistics (ONS)
Transport (Primary topic)
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
- TERM 020
Contacts and ownership
EEA Contact InfoCinzia Pastorello
EEA Management Plan2009 2.10.2 (note: EEA internal system)
Frequency of updates
For references, please go to www.eea.europa.eu/soer or scan the QR code.
This briefing is part of the EEA's report The European Environment - State and Outlook 2015. The EEA is an official agency of the EU, tasked with providing information on Europe’s environment.
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