The impact of Financial Crises on the CPI

In October 2008 the Icelandic bank system collapsed followed by severe economic turmoil. This paper describes the effect of the crises on the calculation of the Icelandic CPI. Among the problems rising are reduced sample of outlets due to closing down, reduced availability of goods in the stores, collapsing of the market for new cars. The economic downturn also leads to a sudden change in consumptions patterns causing difficult measurement problems. This paper describes the theoretical and practical treatment of those problems in the Icelandic CPI. Key words: Consumer price index, household expenditure surveys, shopping substitutio