In accordance with Group accounting policies regarding the criteria for introducing/ending inflation accounting, the subsidiary PIRELLI de Venezuela C.A. adopted inflation accounting beginning with preparation of the consolidated financial statements at December 31, 2009. It is the only Group company operating in a high-inflation country. For this purpose, a blended price index has been used: a consumer price index (IPC) covering only the cities of Caracas and Maracaibo was used until December 31, 2007. Beginning in 2008 the Banco Central de Venezuela and the National Institute for Statistics started to publish a national consumer price index (Indice Nacional de precios al consumidor - INPC) that covers the entire country and uses December 2007 as its basis for calculation.

These indexes and the related conversion factors are presented in the table below:

December 31. 2007 100.0 1.6370
December 31. 2008 130.9 1.2506
December 31. 2009 163.7 1.2718
December 31. 2010 208.2 1.2757
December 31. 2011 265.6 1.0000


The losses on the net monetary position are recognised in the income statement under the item “Financial expenses” (note 37) for an amount of euro 10,542 thousand (euro 11,702 thousand at December 31, 2010).