The Harmonised Index of Consumer Prices (HICP) is used to compare inflation rates across the European Union. 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, and 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 coverage of the HICP is based on an international classification system, COICOP (Classification of Individual Consumption by Purpose), for comparability purposes at EU level. Hence, the calculated indices are aggregated into COICOP codes for consistency. The HICP indices are compiled under the European Framework Regulation (EC) No. 2494/95 of 23 October 1995.
Data for the HICP is compiled from price readings which are gathered every month from various outlets across Malta and Gozo, by a team of price collectors. Besides this, prices for certain services are also collected by means of mail surveys, administrative data sources, telephone surveys, and online sources. The Retail Price Index (consumer price index used at a national level) captures private households only whereas the HICP covers private households, institutional households (such as retirement homes) and foreign visitors to Malta. The differences in the underlying weighting schemes between the RPI and the HICP account significantly for the disparities in their results on a monthly basis.
The HICP is being published with 2015 as its base year, which was updated in agreement with the Commission Regulation 2015/2010. As already indicated, the HICP is a chain index that is subject to review on an annual basis. It should be noted that the re-basing operation was conducted after rounding all past indices to one decimal place as required by Eurostat.
The HICP is produced according to rules specified in a series of European Union Regulations that were developed by Eurostat in conjunction with the EU Member States. When aggregating the individual country indices for publication, Eurostat uses weights that are based on each country’s share of each relative bloc’s total household final consumption expenditure. Note that the HICP weighting scheme is updated annually in accordance with Commission Regulation (EU) No. 1114/2010, while seasonal items are treated in accordance to Commission Regulation (EC) No. 330/2009.
Other measures produced are the inflation rate, percentage change on a monthly and annual basis, impact on inflation, and twelve-month moving average rate.
Accuracy and reliability of data
Information on the accuracy and reliability of data can be viewed in a dedicated ESMS metadata report available on the NSO metadata website.
Timeliness and punctuality of data
The HICP is published by the NSO and Eurostat on a monthly basis. HICP flash estimates data are also transmitted to Eurostat on a monthly basis. Eurostat also publishes aggregate HICP indices for the euro area countries and the European Union. Data pertaining to a particular month is published in the subsequent month. This is also accessible on the NSO website and each release is published on the pre-established date, as scheduled in the Advance Release Calendar, which can be viewed also on the NSO website.
Accessibility and clarity of data
HICP data can be accessed from Eurostat’s database. A metadata report is sent to Eurostat every few years. This report is also produced at a national level and is made available on the NSO metadata website.
Coherence and comparability/consistency of data
The HICP largely follows National Accounts concepts of what constitutes household consumption in determining the index scope, and mainly uses National Accounts data sources to weight the items in the basket. This makes for increased coherence between the HICP commodity and population coverage and National Accounts principles. As a result, HICP weights are therefore based on the final consumption expenditure of all individuals in the domestic territory, including spending by private households, institutional households and foreign visitors. National Accounts principles have also influenced the classification of goods and services within this index.
HICP data is fully comparable over time. This data is available as from 1996 onwards. In order to improve reliability and comparability, there have been several improvements in the HICP methodology. Although these changes may have introduced breaks in series, back calculations using the new methodology were performed whenever all the necessary data was available. HICP data can also be compared with those of other countries. The last revision was held in 2012.