price index composed of the cost-ofliving indices of the individual Member States of the Eurosystem. It is widely used as a benchmark for the ECB’s monetary policy objectives. Because about 700 services (about forty percent) and goods are identified in each euro area member country for the calculation, the HICP is based on about 1.7 million individual prices; and it therefore has a very high representativeness. – The index is calculated by Eurostat and continuously improved in terms of survey technique, delimitation, weighting and other characteristics. The HICP is available for the period from 1995. – The HICP weights goods solely on the basis of their share in the expenditure of an average private household in the aggregate. It cannot take special account of low-income earners, for example. Among these households, the daily necessities (victuals; food; cigarettes; cigarettes), which are particularly affected by price increases, usually have a very high percentage. For lower income earners, it therefore does no good if, say, mobile phones, laptops or perfume become cheaper. – See alignment, single-aisle, base effect, construction price index, procurement shifts, organic markup, energy prices, basket of goods, HICP hump, inflation, inflation, perceived, core inflation, quality changes, cost-of-living price index, product novelties, housing substitution behavior, owner-occupied, two-pillar principle. – Cf. ECB Monthly Bulletin of October 1999, pp. 39 ff; ECB Monthly Bulletin of December 2000, pp. 30 ff; ECB Monthly Bulletin of April 2001, pp. 47 ff; ECB Monthly Bulletin of May 2001, pp. 42 ff, ECB Monthly Bulletin of June 2001, pp. 42 ff. (here a breakdown of developments since 1999), ECB Monthly Bulletin of August 2002, pp. 43 ff. (here also explanations of price level convergence), ECB Monthly Bulletin of April 2003, p. 29 (new weighting scheme), ECB Monthly Bulletin of September 2003 (analysis of the causes of volatility), ECB Annual Report 2003, pp. 16 ff. (basic presentation). – The current level and development (from 1995 onward) of the HICP is shown in the “Euro area statistics” section of the ECB’s Monthly Bulletin under the heading “Prices, output, demand and labor markets” (broadly disaggregated commentary). The updated weighting scheme can be found in the ECB’s Monthly Bulletin of March 2002, p. 39 (there also on the application of additional harmonization rules as of January 2002). For information on the impact of the changeover to the euro on the HICP, see the ECB’s Annual Report 2001, p. 37 f. On the impact of taxes and administered prices on the index, see the ECB’s Monthly Bulletin of January 2004, pp. 32 ff. On the influence of the most volatile component in the HICP, namely the price of oil, see the ECB’s Monthly Bulletin of January 2005, p. 35 ff. For other components, see the ECB’s Annual Report 2004, p. 44 ff, ECB Monthly Bulletin of July 2005, pp. 61 ff. (detailed explanation; many overviews), ECB Monthly Bulletin of March 2006, pp. 56 ff. (improved procedures in the calculation), ECB Monthly Bulletin of March 2007, pp. 54 ff. (seasonal influences; overviews), ECB Monthly Bulletin of May 2007, pp. 76 f. (quality of the HICP), Deutsche Bundesbank Monthly Report of April 2008, pp. 34 ff. (reweighting, p. 39: sample of goods and services), ECB Monthly Report of September 2008, pp. 13 ff. (increase in food prices; overviews), Deutsche Bundesbank Monthly Report of December 2008, pp. 41 f. (change in HICPs within the EMU countries since 1999), ECB Monthly Bulletin of October 2009, pp. 43 f. f. (movement of the HICP during the financial crisis; overviews), ECB Monthly Bulletin of November 2009, pp. 50 ff. (taxes and the HICP), ECB Monthly Bulletin of June 2010, pp. 60 ff. (prices for agricultural commodities and food in the 2007-April 2010 HICP), ECB Monthly Bulletin of April 2011, pp. 40 ff. (methodological changes in coverage and their effects; overviews), ECB Monthly Bulletin of October 2011, pp. 52 et seq. (effects of changes in world market prices on the HICP; overviews), ECB Monthly Bulletin of January 2012, pp. 48 et seq. (increases in oil prices [over five percent annually since 1999] and indirect taxes are the main causes of price increases; overviews), ECB Monthly Bulletin of February 2012, pp. 59 et seq. (price increases broken down since 1999; overviews), ECB Monthly Bulletin of March 2012, pp. 70 et seq. (change in indirect taxes on consumer prices; overviews), ECB Monthly Bulletin of April 2012, pp. 42 et seq. (rebalancing), ECB Monthly Bulletin of October 2013, pp. 66 et seq. (food prices on the world market and in the EU; overview; tendency to converge), ECB Monthly Bulletin of February 2014, pp. 56 et seq. (base effects and their impact; overviews), ECB Monthly Bulletin of March 2014, pp. 64 et seq. (influence of service prices on the HICP; overviews), ECB Monthly Bulletin of April 2014, pp. 45 et seq. (measurement problems), Deutsche Bundesbank Monthly Bulletin of August 2014, pp, 13 et seq. (determinants of food prices).
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