The HICP (Harmonised Index of Consumer Prices) is the equivalent indicator of the American CPI, representing the development of price changes in goods and services. Most of all, consumer goods and services purchased by consumers by means of monetary transactions, are included in the HICP.
The HICP only takes into consideration the actual monetary flow, which is important to remember when analysing some sectors, such as healthcare, when the state financially participates in the costs of medicine. In the case of medicine, only the actual payment made by the consumer is taken into account, disregarding the value subsidised by the state.
One other important characteristic of the HICP is that it is not a strict fixed-basket index like the CPI. It rather includes fixed “consumption segments” (sets of consumer expenditures that serve a common purpose), where the composition of items included in the given segment may be subject to revision from time to time.
The HICP is another popular economic indicator that is rather difficult to interpret. In general, a rise of inflation decreases the purchasing power, and as such is rather disadvantageous for the currency. On the other hand, an increase of inflationary pressure may lead to expectations of an increase in nominal interest rates, and as such increase the demand for the given currency.
Periodicity of publication
The HICP data is published every month by Eurostat - the statistical office of the European communities.