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2019-02-15

Changes in prices calculated based on the HICP

 

  • In January 2019, average annual inflation calculated based on the harmonised index of consumer prices (HICP), which is methodologically harmonised with those of other EU member states, stood at 2.4 per cent and was by 0.1 percentage points lower than that calculated based on the consumer price index (CPI).


Fig. 1. Average annual inflation calculated based on the HICP
Per cent

 

  • In January 2019, annual inflation (January 2019, against January 2018) calculated based on the HICP stood at 1.6 per cent and was by 0.1 percentage points lower than the CPI-based one.


Fig. 2. Annual inflation calculated based on the HICP
Per cent

  • In January 2019, against December 2018, the overall change in prices for consumer goods and services calculated based on the HICP was negative and stood at minus 0.1 per cent. The overall change in prices for consumer goods and services calculated based on the CPI stood at 0.2 per cent.


Table 1. Rates of change in prices for consumer goods and services calculated based on the HICP, January 2019

ECOICOP1 divisions of consumer goods and services

Relative share (weight) in total consumption expenditure, ‰

Price growth, drop (–), %

January 2019, against

Average annual

January 2018–2019
January 2017–2018

December 2018

January 2018

Consumption goods and services

1 000.0

–0.1

1.6

2.4

Food products and non-alcoholic beverages

197.9

1.0

–0.1

1.2

Alcoholic beverages and tobacco products

73.4

0.4

3.0

3.3

Clothing and footwear

67.9

–8.0

–2.2

–0.1

Housing, water, electricity, gas and other fuels

111.4

2.7

5.2

3.2

Furnishings, household equipment and routine maintenance

72.0

0.6

1.7

0.8

Health care

59.4

1.5

4.5

1.7

Transport

154.7

–2.2

0.0

4.4

Communications

28.0

0.3

–1.0

–1.4

Recreation and culture

84.0

0.1

1.1

2.1

Education

13.3

–0.2

3.0

3.1

Hotels, cafes and restaurants

61.9

0.3

5.6

5.3

Miscellaneous goods and services

76.1

1.7

2.5

2.9

_________________________________
1 European Classification of Individual Consumption According to Purpose – ECOICOP

 

More detailed information on the greatest influence on the overall change in consumer prices is provided in the following table:


Differences between the HICP and the CPI

Purpose. The HICP is an instrument for measuring inflation in the EU and making international comparisons, as well as for the compilation of the European index of consumer prices (covering 28 EU member states), Monetary Union index of consumer prices (covering 19 EU member states belonging to the euro area), and the European Economic Area index of consumer prices (covering 28 EU member states, Iceland and Norway). The extent to which a country fulfils the price stability criterion established in Article 140 of the Treaty on the Functioning of the European Union is measured taking into consideration the inflation rate calculated based on the HICP.

The CPI is used to measure the inflation rate in the country; it is the key instrument for indexation.

Coverage. The HICP, alongside consumption expenditure incurred by the residents of the country, covers consumption expenditure incurred by non-residents and visitors from abroad within the economic territory of the country. The CPI covers consumption expenditure incurred only by the residents of the country within the economic territory of the country. The HICP does not cover household expenditure on games of chance and financial intermediation services, while the CPI does cover them.

Classification. For the calculation of the CPI, the Classification of Individual Consumption by Purpose (COICOP 1999) is used. The European Classification of Individual Consumption According to Purpose – (ECOICOP) has been adjusted for the calculation of the HICP.

Weights. Due to a different coverage of consumption expenditure, weighting systems used for the HICP and CPI compilation differ. This is the primary factor leading to differences in index values.

In order to compare the weighting systems used for the HICP and CPI compilation, relative share (weight) in consumption expenditure is given in per cent.


Table 2. Relative share of the HICP and the CPI and its difference

ECOICOP1 divisions of consumer goods and services

Relative share (weight) in total l consumption expenditure, used

Difference of relative  share (weight) in  consumption expenditure, used for  the HICP and CPI compilation, in percentage points

for the HICP compilation, %

for the CPI I compilation, %

Consumption goods and services

100.00  

100.00  

0.00  

Food products and non-alcoholic beverages

19.79  

20.97  

–1.18  

Alcoholic beverages and tobacco products

7.34  

8.51  

 –1.17  

Clothing and footwear

6.79  

6.95  

–0.16  

Housing, water, electricity, gas and other fuels

11.14  

12.01  

–0.87  

Furnishings, household equipment and routine maintenance

7.20  

 5.24  

1.96  

Health care

5.94  

7.05  

–1.11  

Transport

15.47  

14.26  

1.21  

Communications

2.80  

3.11  

–0.31  

Recreation and culture

8.40  

7.31  

1.09  

Education

1.33  

1.77  

–0.44  

Hotels, cafes and restaurants

6.19  

5.85  

0.34  

Miscellaneous goods and services

7.61  

6.97  

0.64  

 

Concepts

Inflation is a long-term increase in the general price level, resulting in a decrease in the purchasing power of money. Inflation is usually calculated based on the consumer price index and expressed in per cent.

Annual inflation shows the relative change in the average price level in the reporting month and the corresponding month of the previous year.

Harmonized index of consumer prices – a consumer price index compiled according to a methodology harmonised across the European Union.

Consumer price index – a relative indicator reflecting the overall change in prices for consumer goods and services purchased by households to satisfy their consumption needs over a certain period of time.

Average annual inflation shows the relative change in the average price level in the last twelve months and the corresponding previous twelve months.


A news release on the February 2019 inflation calculated based on the HICP is due on 12 March 2019.


For more information on the issue, please see the Database of Indicators and Eurostat’s website.



Contact info :

Renata Paškevičienė
Adviser, Price Statistics Division
Tel. (+370 5) 236 4781
Email renata.paskeviciene@stat.gov.lt

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Reproduction and quotation are authorised provided the source is acknowledged.

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