Complementing the SAPI methodology

This paper extends the SAPI (Subsistence-Adjusted Price Index) methodology by formally testing its statistical relationship with the Consumer Price Index (CPI) over the period 1994–2024. Using data reconstructed from IPiSS and Statistics Poland, the study applies structural break tests (Bai–Perron and Chow), Johansen cointegration analysis with break dummies, and a Vector Error Correction Model (VECM) to examine both long-run and short-run dynamics. The results identify multiple structural breaks (1996, 2000, 2006, and 2021), confirming the importance of methodological and macroeconomic shifts in shaping both indices. Cointegration analysis reveals a stable long-run relationship between SAPI and CPI, with faster adjustment toward equilibrium observed for SAPI. Short-run dynamics indicate one-sided Granger causality running from SAPI to CPI, suggesting that changes in subsistence costs precede and influence inflation, while the reverse effect is not statistically significant. Additionally, SAPI exhibits short-term autoregressive behavior, unlike CPI. These findings support the interpretation of SAPI as a complementary indicator to CPI, capturing price dynamics relevant to low-income households and offering additional insight into inflationary processes. The results provide a foundation for further development and validation of SAPI as a policy-relevant measure of cost-of-living pressures.