“HARMONIZATION OF CONSUMER PRICE INDICES”
Differences between HICP/CPI – analysis of HICP-CPI differences
Eurostat Paper
At the October 2006 meeting of the HICP Working Group Eurostat proposed a series of action points to improve HICP
Communications during 2007. One of those action points concerned explaining differences between HICPs and CPIs. Information
on the differences between HICPs and CPIs was provided by all NSIs to Eurostat in 2005/2006 for the country-specific SDDS
documentation. It is therefore straightforward to summarise that information in a single document. It was also suggested to
supplement that summary with estimates of the size of the differences (i.e. a CPI/HICP numerical reconciliation for recent years),
and make those estimates available on the Eurostat website and the statistical part of the ECB website.
This document gives summaries of the existing SDDS information available on the differences between HICPs and national
CPIs. The following are provided:
Annex 1: SDDS data on HICP/CPI differences reported by NSIs,
Annex 2: Summary table of differences between HICP and national CPI,
It seems clear from Annexes 1 and 2 that the information currently available is incomplete, and some points need to be
clarified or will need to be corrected. Annex 3 contains a draft of a questionnaire designed to complete the available information.
This is not to be completed by NSIs at this stage.
Once the table in Annex 2 has been finalised, the next stage will be to supplement that summary with estimates of the size
of the differences (a CPI/HICP numerical reconciliation for recent years). For comparability, those estimates should be compiled by
NSIs using a common classification. For that purpose Eurostat proposes the following breakdown:
• Taxes and fees
• Gambling and lotteries
• National vs. domestic concept
• Owner-occupied housing
• Financial services
• Education, health and social protection services
• Other differences (important ones should be noted)
The Working Group is invited to:
Discuss the summaries provided in Annex 1 and 2 and provide the necessary corrections and clarifications – either during
the meeting or following the meeting.
Comment on the proposed questionnaire to clarify the available information (Annex 3)
Discuss the proposed breakdown to be used for collecting estimates of the size of the differences between HICPs and CPIs.
The estimates themselves are not to be provided at this stage.
Annex 1
CPI / HICP differences – extract from Eurostat Metadata in SDDS format
AUSTRIA. The following expenditure is included in the HICP but excluded from national CPI: consumption expenditure
of non-residents in the economic territory.
The following consumption expenditure is included in the national CPI but excluded from HICP: Monetary expenditure of
investments in an owner-occupied house is measured (major repairs), but not the acquisition of the house itself. Games of chance,
road taxes and insurance for owner-occupied housing are also included in the national CPI, but excluded from the HICP.
BELGIUM. Following expenditure is included in the HICP but excluded from national CPI: institutional households and
consumption expenditure of non-residents in the economic territory.
Following consumption expenditure is included in national CPI but excluded from HICP: expenditure of national residents
abroad).
BULGARIA. Currently there are no differences between the HICP and the national CPI: Calculated HICP is equal to the
national CPI.
CYPRUS. The following expenditure is included in the HICP but excluded from the national CPI: institutional households
and expenditure by foreign visitors.
The following consumption expenditure is included in the national CPI but excluded from the HICP: imputed rents up to
2005. As of January 2006 (new base 2005=100) a part of imputed rents is included in the national CPI.
CZECH REPUBLIC. The following expenditure is included in the HICP but excluded from national CPI: consumption
expenditure of non-residents in the economic territory.
The following consumption expenditure is included in national CPI but excluded from HICP: Monetary expenditure of
investments in the owner-occupied house is measured (major repairs), but not the purchase of the house itself.
Games of chance, drugs, prostitution etc. are excluded both from CPI and HICP.
DENMARK. The national CPI and the HICP are based on exactly the same price observations for the same items collected
from the same outlets. Gross prices are used in both cases. There is also no difference between the methods of calculating the
national CPI and the HICP. The only difference is the coverage: All expenditure consumption included in the HICP is also included
in the national CPI, but owner-occupied dwellings and insurance in connection with owner-occupied dwellings are not included in
the HICP; they are included in the national CPI instead.
ESTONIA. Domestic approach is used for HICP. National approach is used for CPI. There are no consumption expenditures
which are included in the HICP but excluded from CPI. Some elements of games of chance (lotteries) are included in the CPI but
excluded from HICP.
FINLAND. The following expenditure is included in the HICP but excluded from national CPI: none
The following consumption expenditure is included in national CPI but excluded from HICP: Owner-occupied housing, games
of chance, and some tax-type fees.
FRANCE. For health, education and social protection expenditures, the CPI uses gross prices, whereas the HICP uses net
prices.
GERMANY. Following expenditures are included in national CPI but excluded from HICP: traffic taxes, lotteries, and
owner occupied housing.
GREECE. - different population coverage
The Greek HICP covers all consumption expenditures which take place on the economic territory of Greece by including
the expenditures of private households, expenditures by foreign visitors (tourists) in the country and expenditures by individuals
living in institutions (boarding-houses, retirement homes, hospitals, etc.). On the other hand, the national CPI only covers the
consumption expenditures of private households which take place on the economic territory of Greece.
- different weights of items and use of different data sources for calculating the weights
The weights of items in the HICP and the national CPI are different due to the different geographic population of the two
indices. The obligation to cover the expenditures by foreign visitors in the country is the main reason why the National Accounts are
the usual source of expenditure data for calculating the weights of items in the HICP. By contrast, the usual source of expenditure
data for the calculation of the weights of items in the national CPI is the most recent HBS.
- different frequency of renewal and updating of the weights of items
The renewal of the weights of items in the HICP is governed by Commission Regulation (EC) No 2454/97. Furthermore,
these weights are price-updated every January to the previous December. The weights of items in the national CPI are renewed at
the revisions of the index.
HUNGARY. The following expenditure is included in the HICP but excluded from the national CPI:
− expenditure by foreign visitors.
The following consumption expenditure is included in the national CPI but excluded from the HICP:
− cost of owner-occupied housing,
− games of chance.
ICELAND.There are following differences between the HICP and the national CPI:
− The HICP is based on the concept of domestic consumption, while the national CPI is based on the concept of national
consumption. Expenses of foreign tourists, household members that are older than 74 years and of those living in institutions are
included in the weight of the harmonized index but not in the Icelandic consumer price index.
− The harmonized index is mostly a sub-index of the Icelandic consumer price index, though they differ in scope. The most
significant difference is that owner occupied housing and games of chance are included in the national CPI but not in the HICP.
IRELAND. The following expenditure is included in the HICP but excluded from the national CPI: N/A
The following consumption expenditure is included in the national CPI but excluded from the HICP: mortgage interest, union
subscriptions, motor car tax, motor cycle tax, building materials, motor car insurance (non-service), dwelling insurance (non-service).
ITALY. Based on the same survey, Istat compiles three different kinds of consumer price indices:
• Consumer price index for the whole nation (NIC Index);
• Harmonized EU consumer price index (HICP Index);
• Consumer price index for blue and white-collar worker households (FOI Index).
Both the NIC and the FOI index refer to household final consumption, while the HICP refers to household final monetary
consumption expenditure. Consequently, the national indicators provide a measure of the evolution of “gross prices” (i.e. the total prices
of products, whether fully or partially paid by consumers), whereas the HICP measures the changes in “purchase prices” (i.e. net prices
actually paid by consumers).
Moreover, starting from the year 2001, the HICP has taken into account temporary price reductions (i.e. sales), which are
excluded by the NIC and FOI indices.
Finally, lottery games are included in the basket for the national CPI but excluded from the HICP.
LATVIA. The following expenditure is included in the HICP but excluded from the national CPI: consumption expenditure
of non-residents in the economic territory of the country.
The following consumption expenditure is included in the national CPI but excluded from the HICP: expenditure of
residents abroad and expenditure on gambling and games of chance.
LITHUANIA. The HICP differs from the national CPI in coverage, weights, classification.
The consumption expenditure of institutional households, non-residents and visitors from abroad in the economic territory
of the country is included in the HICP but excluded from the national CPI. The following consumption expenditure is included in
the national CPI but excluded from the HICP: games of chance and financial intermediation services. Due to the different coverage
of consumption expenditure, the weights used for the HICP and the CPI differ. To calculate the HICP, classification COICOP/HICP
is used. To calculate the national CPI, classification COICOP is used.
LUXEMBOURG. The following expenditure is included in the HICP but excluded from the national CPI: the consumption
expenditure of non-residents in the economic territory of the country.
No expenditure included in the CPI is excluded from the HICP.
There are no other methodological or conceptual differences between the HICP and national CPI.
MALTA. Following expenditure is included in the HICP but excluded from national CPI: The HICP covers all household final
Monetary consumption expenditure.
Following consumption expenditure is included in national CPI but excluded from HICP: The CPI covers all monetary
consumption expenditure incurred by the Maltese on their own soil.
NETHERLANDS. The following expenditure is included in the HICP but excluded from the national CPI: institutional
households and the consumption expenditure of non-residents in the economic territory of the country, private health insurance and
care covered by private health insurance.
The following consumption expenditure is included in the national CPI but excluded from the HICP: the expenditure of
national residents abroad, imputed rents for owner-occupied houses, consumption-related taxes.
NORWAY. There are only a few differences between the HICP and the national CPI:
− In theory the HICP is based on the domestic principle of consumption concept, while the national CPI is based on the
national principle of consumption concept, but in practice no distinctions are made;
− Cost for owner-occupied housing is not included in the HICP;
− Insurance services are treated differently in the two indices as well. In the CPI the weight is based on the gross expenditures
of insurance, while in the HICP the weight is based on net expenditures;
− The price reference period is December for the HICP and July in the national CPI.
POLAND. The following expenditure is included in the HICP but excluded from the national CPI: institutional households
and consumption expenditure of non-residents in the economic territory of the country.
The following consumption expenditure is included in the national CPI but excluded from the HICP: games of chance.
PORTUGAL. The following expenditure is included in the HICP but excluded from the national CPI: consumption
expenditure of non-residents in the economic territory of the country.
The following consumption expenditure is included in the national CPI but excluded from the HICP: games of chance,
expenditure of national residents abroad.
ROMANIA. There are following differences between the HICP and the national CPI:
− the HICP is based on the domestic principle of consumption concept, while the national CPI is based on the national
principle of consumption concept;
− in the compilation of the HICP it is used the concept ‘expenditure net of reimbursement’ in the case of health (pharmaceutical
products) and insurance.
SLOVENIA. There are only a few differences between the HICP and the national CPI:
− the HICP is based on the domestic principle of consumption concept, while the national CPI is based on the national
principle of consumption concept;
− for the HICP, the elementary aggregates (EAs) are calculated as a ratio of geometric mean prices, while the national CPI
uses a ratio of arithmetic mean prices.
SLOVAKIA. The difference between CPI and HICP is in coverage; imputed rentals and some products related to major
maintenance and repairs are excluded from the HICP coverage. The HICP weights follow domestic concept, CPI weights follow
national concept. CPI and HICP use net weights for insurance but in HICP the weights for insurance reflect the average aggregate
expenditure by households on service charges during three years. The administrative charges of private pension funds are excluded
from the weight coverage of financial services in HICP.
SPAIN. The following expenditure is included in the HICP but excluded from the national CPI: institutional households
and consumption expenditure of non-residents in the economic territory of the country.
The following consumption expenditure is included in the national CPI but excluded from the HICP: expenditure of
national residents abroad.
Methodological differences between the HICP and CPI: for insurance and second-hand cars, the CPI uses gross weights
while the HICP uses net weights.
SWEDEN. The following expenditure is included in the HICP but excluded from the national CPI:
− COICOP 06.3: Hospital services.
− COICOP 12.4, part of: Elderly care.
− COICOP 12.6.2, part of: Other financial services n.e.c.: Services that are charged in proportion to transaction value.
The following consumption expenditure is included in the national CPI but excluded from the HICP:
− COICOP 04, part of: User capital cost of owner occupied housing (including real-estate tax).
− COICOP 04, part of: Cost of housing co-operatives (bostadsrätter; measured by imputed rents).
− COICOP 09.4.1, part of: Games of chance (service charge).
The national CPI is designed for several kinds of use, for example compensation. For many years now, the national CPI
has been defined as a Cost-of-Living Index (coli). This has implications for the upper-level aggregation, which deviates from HICP
rules. As of 2005, the national CPI uses a superlative index formula (Walsh) for annual link chaining between full years. As far as
possible, the HICP and the national CPI share the same source data, data preparation and low-level aggregation. The national CPI
is published with a breakdown according to COICOP. There is a CPI Board of Experts, which is authorised to decide on matters of
principle for the CPI calculations.
TURKEY. The HICP does not cover games of chance, while the national CPI covers games of chance.
UNITED KINGDOM. The HICP differs from the national CPI (the Retail Prices Index (RPI)) in the following ways:
− In the HICP the geometric mean is used to combine the individual prices at the most basic level, whereas the RPI uses
the arithmetic mean.
− The HICP excludes a number of RPI series mainly relating to housing costs (for example, Council Tax), and in particular
to owner occupiers’ housing costs (including mortgage interest payments, house depreciation, and structural insurance).
− The HICP includes series for university accommodation fees, foreign students’ university tuition fees, and unit trust and
stockbrokers charges, none of which are included in the RPI.
− Coverage of the HICP is based on COICOP. The RPI employs its own bespoke classification system.
− The index for the purchase of new cars in the HICP is quality adjusted and based on actual published prices for new cars,
whereas in the RPI new car prices are imputed from movements in second hand car prices.
− The HICP weights are based on expenditure by all private households, foreign visitors to the UK and residents of
institutional households. In the RPI, weights are based on expenditure by private households only, excluding the highest income
households (top 4%) and pensioner households mainly dependent on state benefits.
− The construction of the HICP insurance weights follows the ‘net’ concept, i.e. amounts paid out in insurance claims are
distributed among the COICOP headings according to the nature of the claims’ expenditure, with the remainder (the service charge)
being allocated to the relevant insurance heading. The RPI weights follow a ‘gross’ concept, i.e. total expenditure (that is, gross
premiums) is assigned to the relevant insurance heading.
In addition to the above, the following consumption expenditure is included in national CPI (RPI) but is excluded from
HICP:
Vehicles excise duty (road tax), estate agency and conveyancing fees, ground rent, trades union subscriptions, and from
January 2006 Television Licence fees which have been reclassified as a tax in the UK National Accounts and are thus excluded from
the HICP.
Annex 2
Difference between HICP and national CPI
AT
BE
BG
CY
CZ
DK
EE
FI
FR
DE
GR
HU
IS
IE
IT
LT
LV
LU
MT
NL
NO
PL
PT
RO
SI
SK
ES
SE
TR
UK
A. Included in CPI but excluded from
HICP
TAXES, FEES
Road taxes
x
x
Traffic taxes
x
Motor car tax
x
Motor cycle tax
x
Consumption related taxes
x
Tax-type fees
x
Estate agency and conveyancing fees
x
Television Licence fees
x
Trades union subscriptions
x
x
GAMBLING and LOTTERY
Gambling
Games of chance
x
x
x
x
x
x
x
x
x
x
x
x
x
x
NATIONAL vs. DOMESTIC CONCEPT
Expenditure of national residents abroad
x
x
Expenditures of national residents on their
soil
x
x
x
FINANCIAL SERVICES
Administrative charges of private pension
funds
x
Financial intermediation services
x
OWNER-OCCUPIED HOUSING
Owner-occupied dwellings
x
x
x
x
x
x
Major maintenance and repairs
x
Insurance rel. to owner-occupied housing
x
Acquisition of house
x
x
x
x
User capital cost of owner-occupied
housing
x
Cost of housing cooperatives
x
Ground rent
Imputed rents
Mortgage interest
x
x
x
x
x
Draft, version 06.03.2007
AT
BE
BG
CY
CZ
DK
EE
FI
FR
DE
GR
HU
IS
IE
IT
LV
LU
MT
NL
NO
PL
PT
RO
SI
SK
ES
SE
TR
UK
A. Included in HICP but
excluded from CPI
TAXES, FEES
university
accommodation fees
x
university tuition fees
x
NATIONAL vs.
DOMESTIC CONCEPT
Consumption expenditure
of non-residents in the
economic territory
institutional households
household members over
74 years
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
FINANCIAL SERVICES
unit trust charges
x
stockbrokers charges
x
HEALTH CARE
private health insurance
x
care - covered by private
health insurance
x
hospital services
x
elderly care
x
other financial services
ANNEX 3
Draft version NOT to be completed by NSIs
NATIONAL vs. DOMESTIC CONCEPT
Are the following types of "institutional households" included in your HICP/CPI?
HICP
CPI
a. old person’s homes
b. hospitals
c. hostels
d. boarding houses
e. prisons
f. military barracks
g. disabled children’s homes
h. sanatoriums
i. penal institutions
yes
yes
yes
yes
yes
yes
yes
yes
yes
 no
 no
 no
 no
 no
 no
 no
 no
 no
yes
yes
yes
yes
yes
yes
yes
yes
yes
 no
 no
 no
 no
 no
 no
 no
 no
 no
How are high income families treated? Are they covered in HICP/CPI index?
HICP
CPI
yes
 no
yes
 no
If different, please, be specific………………………………………………………………
TAXES, FEES
Are car related taxes covered in HICP/CPI?
HICP
CPI
yes
 no
yes
 no
If yes, could you list them concretely? …...……………………………………………………
Are television licence fees covered in the HICP/CPI index?
HICP
CPI
yes
 no
yes
 no
If not, could you explain it? ....................................................................................................
Taking into account Commission Regulation (EC) No. 1920/2001 are proportional charges included in the HICP/CPI index?
HICP
CPI
yes
 no
yes
 no
HEALTH SERVICE
Relating to Commission Regulation (EC) No. 2166/99 the prices for goods and services for health, education and social protection are
supposed to be recorded net of reimbursements. Do you apply this for HICP/CPI?
HICP
CPI
yes
 no
yes
 no
If different, please, specify: ……………………………………………………………………
PRICE REDUCTION
According to Commission Regulation (EC) No. 2602/2000 the prices used in the HICP should be recorded after discounts for sales
prices? Do you record sales prices in your HICP/CPI?
HICP
CPI
yes
 no
yes
 no
INSURANCE
Taking into account the Commission Regulation (EC) No. 1617/1999 is insurance treated in same manner in HICP/CPI?
- net weights:
yes
 no
If not, please explain: …………………………………………………………………………..
- prices measured by gross premiums:
yes
 no
If not, please explain …………………………………………………………………………...
COVERAGE DIFFERENCE
Following Commission Regulation No. 2646/98 as regards minimum standards for the treatment of tariffs are following groups treated
in accordance with the regulation?
HICP
CPI
- electricity
yes
 no
yes
 no
- telecommunications
yes
 no
yes
 no
- water
yes
 no
yes
 no
If they are not, please explain………………………....…..……………………………………
QUALITY ADJUSTMENT
Are there any differences in quality adjustment procedures used in the HICP and CPI?
yes
 no
If yes, which products do they relate to? ………………………………………………............
CLASSIFICATION
Do you use the same classification (nomenclature) for HICP index as well as for CPI index?
yes
 no
If not, what are the differences: ...………………………………………………………………
FORMULAE
Are there any differences in the aggregation formulas between HICP and CPI index?
yes
 no
If yes, could you describe the differences? .......………………………………………………...
REFERENCE PERIOD
The Commission Regulation No. 2494/95 lays down the common index reference period for the HICP that is 2005=100. Which index
reference period do you use for CPI index?
…………………………………………………………………………………………………
Are there any other differences that have not been mentioned so far?
yes
 no
If yes, could you provide us with short description? …………………………………………..