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Consumer price behaviour in Luxembourg: evidence from micro CPI data

  • Patrick Lünnemann

    ()

  • Thomas Mathä

    ()

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

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File URL: http://www.bcl.lu/fr/Recherche/publications/cahiers_etudes/17/BCLWP017.pdf
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Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 17.

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Length: 57 pages
Date of creation: Nov 2005
Publication status: published as ?Consumer price behaviour: evidence from Luxembourg micro data? in Managerial and Decision Economics, 2010, 31: 177-192
Handle: RePEc:bcl:bclwop:bclwp017
Contact details of provider: Web page: http://www.bcl.lu/

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