The accuracy of forecasts made for the structure of consumer basket: a comparative analysis between Euro area and Romania

Abstract

In this study, the Markov chain method was used to predict the structure of consumer basket for euro zone and Romania, a country that tries to fulfill the entrance conditions in euro area, by using the same methodology for the determination of harmonized index of consumer prices (HICP). The ex-post assessment of forecasts for 2010-2012 evidences the superiority of forecasts accuracy for euro area based on this method. The highest degree of accuracy in each territorial unit is registered for services weights, according to U Theil's statistic, even if the absolute indicators for accuracy are lower for other weights predictions. It is anticipated that for 2013 the Markov chain method will predict the best foreach consumer basket the food weights forecasts for euro area and the services weights predictions for Romania.