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Harmonised consumer price indices - on inflation measurement in Europe

Author

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  • Wolfgang Nierhaus

Abstract

The harmonised consumer price indices (HCPI) is an effective system for making consumer price indices in Europe more comparable. The HCPI was introduced in order to achieve an optimal measurement of inflation at the level of private households within the euro area and in Europe. In addition, the consumer price index of the euro area (CPI-EMU) is used for the assessment of price stability for the monetary policy strategy of the ECB. However, some methodological criticism can be expressed regarding the HCPI. As a chained index the HCPI - in contrast to the German consumer price index, which is designed according to the fixed-basis approach - cannot be consistently aggregated over the component indices. A splitting up into particularly interesting components is therefore not possible. In general, the HCPI cannot be interpreted, in general, as expenditure relationships or as averages of a method of price measurement. Furthermore, the inflation rate over the previous year can be influenced by changes in the expenditure weighting, which contradicts the concept of a pure price comparison even if the weights only change marginally from year to year.

Suggested Citation

  • Wolfgang Nierhaus, 2006. "Harmonised consumer price indices - on inflation measurement in Europe," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(06), pages 11-16, March.
    • Handle: RePEc:ces:ifosdt:v:59:y:2006:i:06:p:11-16
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    Citations

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    Cited by:

    1. Wolfgang Nierhaus, 2007. "Trends in administrated prices in the euro area," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(17), pages 21-24, September.
    2. Karl‐Friedrich Israel & Gunther Schnabl, 2024. "Alternative measures of price inflation and the perception of real income in Germany," The World Economy, Wiley Blackwell, vol. 47(2), pages 618-636, February.
    3. Nierhaus. Wolfgang, 2016. "How Administered Prices and Indirect Taxation Contribute to Inflation in the Euro Area: Latest Results," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(05), pages 28-32, March.
    4. Wolfgang Nierhaus, 2013. "Administered Prices and Indirect Taxes: Implications for Inflation in the Eurozone," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(05), pages 42-46, March.
    5. Wolfgang Nierhaus, 2017. "Current Consumer Price Development in the Euroarea," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(05), pages 22-26, March.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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