Comparative Analysis of the Consumer Price Index between Kosovo and Other Countries of the Region and Europe

Abstract

Prices of basic products consumption and the rate of correct change, these products is essential to almost every economic issues, ranging from the aspect of monetary policy - credit for measuring economic development (growth), and over time this indicator macroeconomic it is applied more and more countries around the world to measure the cost and structure of indexed government spending and state taxes. Most of us are familiar with the prices of many consumer products that we buy and consume. We know what value have recently paid for a kilogram of meat or a liter of milk. Tenants know what value to pay their rent at the end of the month. For this reason, the measurement of prices may seem simple and straightforward, but really this price measure is not simple, especially when dealing with the comparative analysis between different countries and between different periods of time. The aim of the consumer price index is to summarize information on the prices of many goods and services. Consumer expenditures account for about two-thirds of the world's gross product (GDP). Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) are designed to summarize information on the prices of goods purchased by consumers in different periods of time. In a hypothetical primitive society with only one product (a type of food), it is not necessary to measure the consumer price index, because we have only one product. When there are many goods and services, however, we need a proper method which on average accounts all price changes or aggregating information different consumer prices.In this scientific paper will be presented a comparative analysis of the consumer price index between Kosovo and other countries in the region and Europe. The main aim of this empirical research is to identify the cost of basic consumer products in Kosovo, by comparing the value of this cost to other countries. Overall harmonized index of consumer prices in the country is higher by 0.1% in March 2016 compared with February 2016. The inflation rate in the month of March 2016 was 0.1% in March 2015. This scientific paper aims to identify this research question: What is the value of the cost of basic products consumption in Kosovo compared to other countries of the region and Europe? In order to answer this question, we will rely on secondary data, taken from the Eurostat statistical reports and statistical agencies in the countries included in this study and evaluation of trading basket will be based on the level of the average wages for 2016. The methodology used in this scientific paper consists the use of empirical data, which are processed in STATA program, and applying simple standard regression analysis, we managed raised to test the hypotheses in this study.