Harmonised Index of Consumer Prices (HICP): August 2024
Price changes and effects on inflation
The highest annual inflation rates in August 2024 were recorded in Education (4.1 per cent) and Miscellaneous goods and services (4.1 per cent). On the other hand, the lowest annual inflation rates were registered in Communication (-5.1 per cent) and Clothing and footwear (-1.4 per cent) (Tables 1 and 3).
Chart 1. Inflation rates
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In August 2024, the largest upward contribution to the overall annual inflation was registered in the Restaurants and hotels Index (+0.64 percentage points), largely due to higher prices of restaurant services. The second and third largest contributions were measured in the Food and non-alcoholic beverages Index (+0.60 percentage points) and the Transport Index (+0.41 percentage points), mainly on account of higher prices of vegetables and air transport services, respectively.
The downward contributions to the overall annual inflation were registered in the Communication Index (-0.18 percentage points) and the Clothing and footwear Index (-0.06 percentage points), mainly reflecting lower prices of mobile phone services and garments, respectively (Chart 2, Table 4).
Chart 2. Contributions to the overall annual inflation rate by the 12 ECOICOP divisions
August 2024
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Notes:
1. A percentage point is the arithmetic difference between two percentages.
2. A longer time series of these figures is available in Table 4.
HICP (Malta and euro area)
This section compares the Maltese HICP with the latest data available for the euro area. In August 2024, the annual rate of change registered by the Maltese All-items HICP was 2.4 per cent, 0.2 percentage points higher than the 2.21 per cent registered in the euro area (Chart 3).
1 The last data point available for the euro area is a flash estimate, which is still provisional.
Chart 3. All-items HICP in Malta and the euro area
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Source: NSO and Eurostat.
Methodological Notes
1. Overview
The HICP measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. The HICP is calculated according to rules specified in a series of European Union (EU) regulations that were developed by Eurostat in conjunction with the EU Member States. The HICP is used to compare inflation rates across the EU. A closely related measure of price movements is the Retail Price Index (RPI). A description of the differences between the HICP and the RPI can be found in methodological note 4 of this news release.
Each monthly HICP news release includes three different measures of inflation:
i. The annual inflation rate measures average price changes between the reference month and the same month of the previous year. Although responsive to recent changes in price levels, this measure can be influenced by one-off effects in either month.
ii. The monthly inflation rate compares price changes between the reference month and the previous month. This measure can be highly influenced by seasonal effects.
iii. The 12-month moving average rate overcomes the volatility of the above two rates by comparing the average of the latest 12 indices to the average of the previous 12 indices. This measure is less sensitive to temporary changes in prices.
2. Terminology
i. There are 12 main divisions in the HICP covering consumption. These are described below in methodological note 4 (iii).
ii. ‘Contribution’ in the context of the HICP means the impact on the annual inflation rate made by each division making up the Index.
iii. ‘Weights’ are estimates of the share of importance held by particular divisions of products and services in the overall consumption.
3. Accessing data
NSO news releases and further information on HICP and RPI may be accessed from here.
Eurostat news releases on HICP may be accessed from Eurostat’s website.
4. Differences between HICP and RPI
Both indices are compiled using a large and representative selection of more than 500 different goods and services for which price movements are regularly monitored. More than 19,000 separate price quotations are used each month to compile the Index.
The methodology underlying HICP and RPI is similar, yet they differ by the following:
i. The HICP covers private households, institutional households (such as retirement homes) and foreign visitors to Malta, whereas the RPI captures private households only.
ii. The two indices have different base years. The HICP is a chain-linked index, a statistical technique for linking two indices by relating the values of one index to the value of the other index in the previous period. This makes possible the introduction of newly significant goods and services into the HICP on an annual basis.
The RPI is a fixed-base index, whose weights are updated periodically using relevant sources. Being a fixed-based index, its weights are reviewed every time the base year is changed.
iii. The coverage of the HICP is based on an international classification system, ECOICOP (European Classification of Individual Consumption by Purpose), whereas the RPI has a different set of codes for each group of items, as listed in the table below.
| ECOICOP division | Weight (out of 1000) |
RPI group | Weight (out of 100) |
||
| 1 | Food and non-alcoholic beverages | 180.18 | 1 | Food (including restaurant services and take-aways) | 21.49 |
| 2 | Alcoholic beverages and tobacco | 35.25 | 2 | Beverages and tobacco | 5.56 |
| 3 | Clothing and footwear | 41.38 | 3 | Clothing and footwear | 6.62 |
| 4 | Housing, water, electricity, gas and other fuels | 101.77 | 4 | Housing | 7.90 |
| 5 | Furniture, household equipment and routine household maintenance | 83.88 | 5 | Water, electricity, gas and fuels | 3.31 |
| 6 | Health | 46.88 | 6 | Furnishing and household equipment | 6.97 |
| 7 | Transport | 123.69 | 7 | Transport and communication | 22.10 |
| 8 | Communication | 38.56 | 8 | Personal care and health | 8.81 |
| 9 | Recreation and culture | 83.95 | 9 | Recreation and culture (including education) | 9.90 |
| 10 | Education | 27.32 | 10 | Other goods and services | 7.34 |
| 11 | Restaurants and hotels | 158.11 | |||
| 12 | Miscellaneous goods and services | 79.03 | |||
| Total | 1000.00 | Total | 100.00 |
Apart from the disparities identified above, both the HICP and the RPI:
i. have the same geographic coverage, implying that both indices refer to the whole country;
ii. utilise the same price collection methodologies; and,
iii. utilise the same outlet sample (with some exceptions).
5. Explaining divergences between HICP and RPI inflation
The HICP and RPI price indices bear several similarities and often produce similar inflation estimates. However, in some cases, inherent methodological differences between the two indices, particularly differences in the consumption basket and in the weights given to these products, cause the inflation rates reported by these two measures to diverge.
6. Further information
The HICP is used to compare inflation rates across the EU. It has been used by the European Central Bank (ECB) as the measure of price stability across the euro area since January 1999. Indeed, the HICP was developed in the EU for the purpose of assessing whether prospective members of the European Monetary Union would meet the inflation convergence criterion, later acting as the measure of inflation used by the ECB to assess price stability in the euro area. The main requirement was for a measure that could be used to make reliable comparisons of inflation rates across EU Member States. Such comparisons are not possible using national consumer price indices due to differences in index coverage and construction.
The HICP is published with 2015 as its base year. The previous series with reference 2005=100 has been discontinued. Commission Regulation (EU) No 2015/2010 provides the legal basis for updating the HICP reference year from 2005=100 to 2015=100. It should be noted that the re-basing operation was conducted after rounding all past indices to one decimal place. Therefore, there might be slight differences when comparing this series with past data due to rounding.
The HICP largely follows National Accounts (NA) concepts of what constitutes household consumption in determining the index scope and mainly uses NA data sources to weight the items in the basket. This makes for increased coherence between the HICP commodity and population coverage and NA principles. As a result, HICP weights are based on the final consumption expenditure of all individuals in the domestic territory, including spending by private households, institutional households and foreign visitors. NA principles have also influenced the classification of goods and services within this index. The basket of consumption items considered for the HICP is reviewed annually in line with NA data collected over a 12-month period in order to obtain an estimate of the average household expenditure. New products are included in the basket of items when achieving a sales volume of over one part per thousand of total consumer expenditure covered by the HICP.
The HICP weighting scheme and the treatment of seasonal items are both in accordance with the Commission Regulation (EU) No 2020/1148.
The HICP Flash Estimates started being compiled and transmitted to Eurostat on a monthly basis as from January 2017. These refer to tentative HICP indices and are used to provide an insight to users about the annual rates of special aggregates as determined by Eurostat. Eurostat collects data from all European Member States and compiles annual rates of special aggregates for the entire euro area.
Users are advised to consult the NSO before comparing the results of the HICP and the RPI.
More information on the metadata underlying HICP and RPI news releases may be accessed from:
- Sources and methods
- Statistical concepts
- Metadata (HICP)
- Metadata (RPI)
- ECOICOP division classification
- RPI and HICP manual
- Eurostat statistical database
- ECB digital publication on inflation
The euro area mentioned in this release refers to EA11-1999, EA12-2001, EA13-2007, EA15-2008, EA16-2009, EA17- 2011, EA18-2014, EA19-2015, EA20-2023.
7. Weights
The HICP weights for 2024 were compiled using preliminary quarterly consumer expenditure data for 2023 from the NA, complemented with additional data for 2023 from other sources, such as short-term statistics on retail trade and services.
The HICP weights for 2024 show that, compared to the previous year, the divisions to witness the highest increase in weight in absolute terms were Food and non-alcoholic beverages and Restaurants and hotels, while Communication and Alcoholic beverages and tobacco registered the largest decline in weight.
8. Reassessments / revisions
The HICP series is published with base year 2015 according to the latest Eurostat base year revisions as explained in the document which can be accessed through the following link.
Note that the RPI series is published in accordance to the reference base period December 2016.
The data contained in this release is subject to revision. For an updated time-series which includes past data, please refer to the Statistical Indicators for this domain.
9. A detailed news release calendar is available online.
10. References to this news release are to be cited appropriately. For guidance on access and re-use of data please visit our dedicated webpage.
11. For further assistance send your request through our online request form.
Harmonised Index of Consumer Prices (HICP): August 2024
- In August 2024, the annual rate of inflation as measured by the Harmonised Index of Consumer Prices was 2.4 per cent, up from 2.3 per cent in July 2024.
- The 12-month moving average rate for August stood at 3.1 per cent.
- The largest upward contribution to the overall annual inflation was measured in the Restaurants and hotels Index (+0.64 percentage points), while the largest downward contribution was recorded in the Communication Index (-0.18 percentage points).
