Measuring inflation – the Harmonised Index of Consumer Prices (HICP)

Harmonised inflation (HICP) - The inflation table on this page features an overview of the harmonised inflation by country in HICP inflation The harmonised inflation rate is based upon the consumer price index (HICP, published by Eurostat to compare inflation in European countries). Two inflation rates are being presented.

Romania Day-to-Day Interest Rate. The most important statistics. Poland Maastricht Criterion Interest Rate. Greece Change in Industrial Production. I think of Statista as Google for researchers.

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Annual inflation rate in the Euro Area was revised lower to percent in November of from a preliminary of 2 percent and percent in October. It is the lowest inflation rate in six months amid a broad-based price slowdown, final figures showed. Year-on-year, the highest contributions came.

Work is underway to develop the statistics needed to include price changes for these expenditures in a consistent way across all European countries. Only monetary transactions conducted directly by households are included in the HICP. This is important to remember when analysing some sectors, such as healthcare and education, where provision by the state is common. For example, if a student pays a fixed tuition fee to a university, only the amount of the fee is included in the HICP consumption basket even if the full cost of providing the education is much higher.

Similarly, goods and services produced by households for their own consumption such as home-grown vegetables are not included. Therefore, unlike some national consumer price indices, all types of household including all income classes as well as foreign tourists and all geographical areas both urban and rural of a country are included.

In the literature on consumer price indices, two index types have a prominent role. Fixed-basket price indices , i. These goods and services are weighted according to their share in overall consumption in the base period. The cost-of-living index therefore measures the change in expenditure necessary to maintain the utility of the base period. But the HICP is not a strict fixed-basket index. Although these consumption segments are fixed, the specific products that are included in particular segments may change over time.

In other words, certain items may exit the basket and new ones may enter as they become relevant to household consumption expenditure. In any case, the conceptual differences between the two types of price index do not generally lead to substantial differences in practice. The HICP is supported by a set of legally binding standards that cover the essential aspects of the index. Eurostat has a programme of compliance-monitoring visits, during which the compilation practices of individual national statistical institutes are scrutinised.

The HICP has been developed according to international standards and benefits from the experience of all EU Member States in consumer price statistics. It is the best measure of inflation in the euro area, but it is not perfect. Further work is ongoing to improve the quality and comparability of the index. Key priorities for the coming years are the treatment of owner-occupied housing currently excluded and greater harmonisation of methods for quality adjustment and sampling.

Eurostat and the national statistical institutes are also working on additional indices, for example an HICP index at constant tax rates. In practice, prices cannot be collected for all of the millions of different goods and services available in the euro area.

Sampling procedures are used to derive a representative basket of goods and services to be priced every month. The national statistical institutes are responsible for defining the precise basket by selecting the most representative items for each product category.

Hence, each national HICP will cover bread and cars, but the type of bread and the brand and model of car may differ across countries, reflecting national consumption habits. The HICP basket is updated on an annual basis to include new products that have become an important part of household consumption expenditure such as DVDs , while other products that are no longer representative such as video tapes are eliminated. In addition, within the year, old models of some products are replaced with newer ones.

This occurs, for example, when sales of the old model are so low that its price falls sharply. On average, the prices of around products are collected every month in different outlets and in approximately 1, different towns and cities across the euro area. As a result, around 1. These price observations should reflect the prices actually paid by the consumer by including product taxes such as VAT, excise taxes on alcohol and tobacco, as well as sales price reductions.

To combine the 1. Car prices may have gone up but new models often include, as standard, features that were previously sold as optional extras for example, satellite navigation systems, air conditioning and airbags. In such cases, the price increase is due partly to an increase in quality and not only to inflation.

While the effect of quality changes is usually small for many items in the HICP e. Work is underway in Eurostat to ensure that all countries use comparable techniques for quality adjustment.

The HICP for each euro area country is calculated as a weighted average of price changes for a wide range of product groups, using the respective share of each group in the total expenditure of all households for the goods and services covered by the index. The information used to calculate the weight of each product group is collected mainly by means of household budget surveys and cross-checked and updated with information from other sources e.

VAT revenue statistics and national accounts. The product group weights are representative for the average household consumption expenditure at national level. As such, for each country they capture national consumption habits, which may depend on climate, product taxes, lifestyles, cultural traditions and other factors e.

For example, expenditure on petrol is included for those households with a car and, at the same time, expenditure on bus tickets is included for those that use public transport. What is important in the HICP is its composition, which encompasses the total consumption expenditure of all households together. In order to keep the index up-to-date, product weights are updated regularly to reflect changes in consumer expenditure patterns.

By law, countries must update all weights every 7 years — although in practice most countries update their weights on an annual basis.

Annual inflation rate in the Euro Area is expected to ease to 1. Inflation Rate in the Euro Area averaged 1. Inflation Rate in Euro Area is expected to be 1. Looking forward, we estimate Inflation Rate in Euro Area to stand at 1. In the long-term, the Euro Area Inflation Rate is projected to trend around 2. Trading Economics members can view, download and compare data from nearly countries, including more than 20 million economic indicators, exchange rates, government bond yields, stock indexes and commodity prices.

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Click here to contact us. The main components of the HICP are: This page provides the latest reported value for - Euro Area Inflation Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. Euro Area Inflation Rate - actual data, historical chart and calendar of releases - was last updated on January of