These goods and services are weighted according to their share in overall consumption in a certain base period.īy contrast, in cost-of-living indices it is the “consumer utility” obtained from the purchases in the base period that is kept constant. “Laspeyres price indices”, define a basket of goods and services in the base period that is priced in each subsequent period. In the literature on consumer price indices, two index types have a prominent role. Unlike some national consumer price indices, all types of households (including all income classes as well as foreign tourists) and all geographical areas are included. This includes spending by both resident and non-resident households in that territory (following the so-called “domestic concept”). The HICP covers the expenditure of all households within a country’s economic territory.
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The full range of product groups covered by the HICP consumption basket is given by the European Classification of Individual Consumption by Purpose (ECOICOP/HICP). Similarly, goods and services produced by households for their own consumption (such as home-grown vegetables) are not included. For example, if a student pays a fixed tuition fee to a university, only the amount of the fee is included in the HICP consumption basket even if the full cost of providing the education is much higher. This is important to remember when analysing some expenditure categories, such as healthcare and education, where provision by the state is common. Only monetary transactions conducted directly by households are included in the HICP. Inflation measurement and our strategy review.This will inform the Governing Council’s monetary policy assessments.
Until then, we will use available measures of inflation that include home-ownership costs to support our understanding of how prices are changing in the economy. This could pave the way for a move to an HICP that includes owner-occupied housing costs as the main index to be used for monetary policy. The Governing Council welcomes the European Statistical System’s related work on the statistical compilation of owner-occupied housing.
This includes everyday items such as food, newspapers and petrol, durable goods such as computers and washing machines, and services such as hairdressing, insurance and rented housing.įollowing the 2021 Strategy Review, the Governing Council recommended that home-ownership costs be included in the Harmonised Index of Consumer Prices to better reflect people’s experiences of rising prices. The technical name for these expenditures is “household final monetary consumption expenditure”. Basically all consumer goods and services purchased by means of monetary transactions come within the scope of the HICP.
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