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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This research uses monthly series of annual and monthly HICP rates.
Price indices for basic HICP aggregates are made using one of two formulas included in section 1 of attachment II of the above Regulation or using a comparable formula which leads to the index not differing regularly by more than a tenth of percentage point compared to previous year from the index calculated on the basis of one of two formulas (Wynne, 2002, p.
Table 2: Inflation rate in non-euro NMS, with and without food and energy Estonia HICP HICP-food/energyl Latvia HICP HICP-food/energy Lithuania HICP HICP-food/energy Poland HICP HICP-food/energy Hungary HICP HICP-food/energy Czech Rep HICP HICP-food/energy Slovakia HICP HICP-food/energy 2002 2003 2004 2005 2006 2007 Estonia 3.
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.
Governor Mervyn King has already indicated that the switch was unlikely to have an impact on interest rates, particularly as forecasts of slower house price growth should cause the difference between RPIX and HICP to narrow.
That is because the HICP measure consistently runs well below the RIPX rate.
The non-inclusion of mortgage interest, which fell by 14 per cent in the year, is the key reason for the higher HICP rate.
Pensions rises are currently linked to the RPI but under the plans will be linked to the HICP by November.
In his Budget, the Chancellor talked of using the HICP as a replacement for the RPI.
Unless the Government wishes to change the overall monetary stance, a central target needs to be set for the HICP measure of inflation that would be consistent with the current inflation target of 2.