Harmonized Index of Consumer Prices

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Harmonized Index of Consumer Prices

A measure of inflation used by the European Central Bank that considers what people spend on important goods and services. It is calculated by taking the average of changes in price to a basket of goods and services compiled by EU member states. The goods and services in the basket are weighted according to their perceived importance. The HICP is considered a primary tool in determining how people are experiencing inflation. The European Central Bank attempts to keep inflation as measured by the HICP a little bit below 2% in the medium term.
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Finally, the share of market non-tradables in the HICP is low in the transition economies.
This is of particular concern in the euro area as the ECB has a numerical target for the HICP.
The Bureau recently published an experimental HICP series for the United States.
It now looks likely that HICP will be adopted in November, together with a new 2pc inflation target, and this has sparked off speculation that interest rates may be headed even lower.
While the level of inflation remains high, these developments confirm the view that the past increase in HICP inflation was, to a significant extent, the direct effect of temporary factors which should gradually unwind.
It enables the existence of a possible positive measurement bias in the HICP to be taken into account and creates a "safety margin," which helps ensure that negative rates of "true" inflation are avoided.
The annual average inflation, measured by HICP, in the past 12 months (March 2014 - February 2015), as compared to the previous 12 months (March 2013 - February 2014), stood at -1.
HICP inflation in 2014 has been supported by prices of goods consumed by tourists, while prices of goods consumed by locals have continued to fall and energy prices fell strongly as well in end-2014.
About HICP and International Labor Comparisons (ILC) Harmonized Indexes of Consumer Prices are measures of consumer price inflation that have been standardized across countries based on European Union definitions.
Using the EUs Harmonised Index of Consumer Prices or HICP, which is the European Central Banks inflation yardstick, the cost of living in Germany rose by 2.
The April HICP reading was lower than the headline inflation of 4.