CPI

The Harmonised Index of Consumer Prices (HICP), the euro area HICP, is the monthly gauge of consumer price inflation in the euro area. Eurostat, the statistical office of the European Union, has produced it every month since March 1997 under EU law. National statistical institutes compile the national indices behind the euro area aggregate.

It covers only household monetary spending and excludes imputed rents, where no money changes hands, and it is not a cost of living index. The headline annual rate, the change versus the same month last year, serves the European Central Bank's 2% medium-term aim.

Prices are observed through the reference month, the month being measured, with at least one working week around mid month. A flash estimate, an early headline reading of the annual rate, the change versus the same month last year, is issued at month end.

The full release follows around the middle of the next month. It gives annual and monthly rates, the latter versus the prior month, by country and component. Results are final on release and are not revised, except to correct mistakes. The flash reading is later replaced by the final index, which does not count as a revision.

Four main components drive it, with weights, expenditure shares updated annually.

• Services, 46.8%: rents excluding imputed rents, transport, communications, recreation and personal services.
• Non-energy industrial goods, 25.2%: durables, semi-durables and non-durables excluding energy, such as clothing, cars and furniture.
• Food, alcohol and tobacco, 18.9%: processed food, alcohol and tobacco plus unprocessed food.
• Energy, 9.0%: electricity, gas and fuels, small in weight but volatile and often the largest headline driver.

Eurostat reported October 2022 on 17 November 2022. The annual rate reached 10.6%, up from 9.9% in September 2022 and 4.1% a year earlier, while the monthly rate was 1.5%. Energy rose 41.5% and contributed 4.44 percentage points, although core inflation, excluding energy, food, alcohol and tobacco, was only 5.0%. Food, alcohol and tobacco added 2.74 points, services 1.82 points and non-energy industrial goods 1.62 points.

The lowest national rate was 7.1% in France and the highest 22.5% in Estonia. Against September, rates fell in 11 states, held steady in 3 and rose in 13.

1. Elementary aggregates: combine matched offers with Jevons, a geometric mean of relatives, or Dutot, a ratio of means. With transaction data, weighted or multilateral formulae are allowed.
2. Expenditure shares: derive shares from past expenditure data, adjust them to the prior year, then rescale them by prices to December, the price reference month.
3. Short-term index: compute a Laspeyres-type index, a weighted mean of price relatives with weights fixed for the year. For example, weights 0.600 and 0.400 with relatives 1.02 and 1.05 give 1.032, or 103.2.
4. Aggregation and chain-linking: average lower indices into higher groups and countries by spending share, then chain-link each yearly run onto the long series. The series is expressed against 2015 = 100, a rescaling that leaves rates unchanged apart from rounding.
5. Rates, contributions and seasonal adjustment: publish the monthly rate, change versus the prior month, and the annual rate, change versus the same month last year. Contributions, each component share of change, multiply the rate of change by the price-updated weight, and no seasonal adjustment is applied at any step.