Real change in transport prices by mode

Indicator Assessment
Prod-ID: IND-173-en
Also known as: TERM 020
Created 03 Sep 2010 Published 15 Sep 2010 Last modified 04 Sep 2015, 07:00 PM
Note: new version is available!
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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.

Key messages

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?

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.

Data source:

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).

http://epp.eurostat.ec.europa.eu/portal/page?_pageid=0,1136173,0_45570701&_dad=portal&_schema=PORTAL

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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

Data source:

UK National Statistics, National Statistics/Services Producer Prices Index (experiemental)/Q1 2009 Data. http://www.statistics.gov.uk/statbase/product.asp?vlnk=7351,

http://www.statistics.gov.uk/downloads/experimental/SPPI-release-2008Q4.pdf

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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

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 (all-items HICP (global or overall index/rate)). 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

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.

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

Data sources

Generic metadata

Topics:

Transport Transport (Primary topic)

Tags:
passengers | transport indicators | transport | freight
DPSIR: Driving force
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
Indicator codes
  • TERM 020
Dynamic
Temporal coverage:
1996-2008
Geographic coverage:
Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom

Contacts and ownership

EEA Contact Info

Diana Vedlugaite

EEA Management Plan

2009 2.10.2 (note: EEA internal system)

Dates

Frequency of updates

Updates are scheduled once per year
European Environment Agency (EEA)
Kongens Nytorv 6
1050 Copenhagen K
Denmark
Phone: +45 3336 7100