Harmonized Index of Consumer Prices (HICP)

What Is the Harmonized Index of Consumer Prices (HICP)?

The Harmonized Index of Consumer Prices (HICP) is a measure of inflation in the European Union (EU). It reflects change after some time in the prices paid by households for a representative basket of goods and services. The European Central Bank (ECB) involves the HICP for the Eurozone including the 19 EU states utilizing the euro common currency to seek after its objective of price stability, defined as 2% annualized inflation over the medium term.

Understanding the Harmonized Index of Consumer Prices (HICP)

Every EU state's statistical agency incorporates a national HICP utilizing a common methodology. Eurostat, a department of the European Commission, then, at that point, utilizes the national HICPs to compute the Monetary Union Index of Consumer Prices (MUICP), the aggregate HICP for the 19-country Eurozone area that fills in as the ECB's primary inflation measure. Eurostat likewise works out the European Index of Consumer Prices (EICP) covering the whole European Union as well as the European Economic Area Index of Consumer Prices consolidating data from EU trading partners Norway, Iceland, and Liechtenstein.

The flash estimate of the Eurozone's MUICP, distributed by Eurostat on the last working day of every month, is a key economic release for financial markets.

Every country's HICP measures the change over the long run in the prices of a basket of goods and services intelligent of the spending examples of that country's households. The index tracks the prices of goods like coffee, tobacco, meat, natural product, household apparatuses, cars, pharmaceuticals, power, clothing, and numerous other widely utilized products and services. Proprietor involved housing costs are excluded from the HICP, however the ECB's Governing Council suggested their inclusion in 2021.

Weighted Baskets

Eurostat computes the Monetary Union Index of Consumer Prices utilizing the weighted average of the HICP from every country in the euro area in view of the country's share of aggregate Eurozone consumer spending.

Every country's HICP measures the change over the long haul in the prices of a basket of goods and services representative spending by that country's households.

The baskets of consumer goods and services and the weightings of every country are refreshed yearly to mirror the latest spending designs.

The MUICP was first arranged in 1998 ahead of the euro currency's send off on Jan. 1, 1999.

Features

• The HICP tracks consumer price inflation in view of the spending examples of consumers in every EU country, weighted by that country's share of aggregate consumer spending.
• The main HICP number for financial markets is the month to month flash estimate of the Monetary Union Index of Consumer Prices, reflecting inflation in the Eurozone containing the 19 EU states utilizing the euro currency.
• The ECB utilizes the MUICP to align its quest for price stability, holding back nothing over the medium term.
• The Harmonized Index of Consumer Prices (HICP) is a measure of inflation in the Eurozone and the European Union.