Euro-zone annual inflation was 2.4% in January 2006², up from 2.2% in December 2005. A year earlier the rate was 1.9%. Monthly inflation was -0.4% in January 2006.

EU25³ annual inflation was 2.2% in January 2006, up from 2.1% in December 2005. A year earlier the rate was 2.0%. Monthly inflation was -0.4% in January 2006.

EICP⁴ annual inflation was 2.2% in January 2006.

These figures come from Eurostat, the Statistical Office of the European Communities.

Inflation in the Member States

In January 2006, the lowest annual rates were observed in Poland (0.9%), Sweden (1.1%), Austria (1.5%) and the Netherlands (1.8%), and the highest rates in Latvia (7.6%), Estonia (4.7%), Spain (4.2%), Luxembourg and Slovakia (both 4.1%). Compared with December 2005, annual inflation rose in fourteen Member States, remained stable in three and fell in seven.

The lowest 12-month averages⁵ up to January 2006 were in Finland⁶ and Sweden (both 0.9%), the Netherlands (1.5%) and the Czech Republic (1.7%); the highest were in Latvia (7.0%), Estonia (4.2%), Luxembourg (3.9%) and Spain (3.5%).

Euro-zone

The main components with the highest annual rates in January 2006 were housing and transport (both 5.5%), alcohol and tobacco and education (both 2.5%), while the lowest annual rates were observed for communications (-2.8%), clothing (-0.8%) and recreation and culture (0.0%). Concerning the detailed sub-indices, fuels for transport had the largest upward impact on the headline rate (+0.51 percentage points), followed by heating oil (+0.20) and gas (+0.17), while garments (-0.19) and telecommunications (-0.16) had the biggest downward impacts.

The main components with the highest monthly rates were housing (1.2%), food and transport (both 0.6%), and the lowest were clothing (-8.1%) and recreation and culture (-2.2%). In particular, fuels for transport (+0.12 percentage points) and gas (+0.07) had the largest upward impacts, while garments (-0.47) and package holidays (-0.20) had the biggest downward impacts.

Annual inflation (%) in January 2006 in ascending order

Euro-zone Member States

EU Member States outside the euro-zone

 Inflation rates in %, measured by HICPs

Source: Eurostat p: Provisional r: Revised

Note: Annual inflation in the USA was 4.0% in January 2006 (national CPI, not strictly comparable to the HICPs). 

Euro-zone inflation rates in % for main components, measured by HICPs

Source: Eurostat * FoodAlcTob: Food, alcohol and tobacco p: Provisional r: Revised

Euro-zone sub-indices with most important impacts

Source: Eurostat

Measures of inflation

The annual rate measures the price change between the current month and the same month of the previous year. This measure is responsive to recent changes in price levels but can be influenced by one-off effects in either month.

The 12-month average rate⁵ overcomes this volatility by comparing average Harmonized Indices of Consumer Prices (HICPs) in the latest 12 months to the average of the previous 12 months. This measure is less sensitive to transient changes in prices.

The monthly rate compares price levels between the two latest months. Although up-to-date, it can be affected by seasonal and other effects.

The impact of a particular component measures the change in the headline inflation due to the inclusion of that component in the HICP. The impact takes account of both the weight and whether the inflation for that component is higher or lower than the all-items inflation rate. For example, the impact of ‘tobacco’ is equal to the difference between the all-items inflation rate and the rate for ‘all-items excluding tobacco’. Impacts are not strictly additive.

HICPs designed for international comparison

Harmonized Indices of Consumer Prices (HICPs) are harmonized inflation figures required under Article 121 of the Treaty of Amsterdam (109j of the Treaty on European Union). They are designed for international comparison of consumer price inflation. The focus is on quality and comparability among the indices of different countries as well as on their relative movements.

Price changes as measured by the HICPs, the Monetary Union Index of Consumer Prices (MUICP), the European Index of Consumer Prices (EICP⁴) and the European Economic Area Index of Consumer Prices (EEAICP) are used as measures of inflation in the Member States, in the euro-zone, in the European Union, and in the European Economic Area.

The MUICP is used by, among others, the European Central Bank (ECB) as a main indicator for monetary policy management for the euro-zone⁸.

The Member States’ HICPs are supplied by the National Statistical Institutes; the MUICP, EICP and EEAICP are compiled by Eurostat. The HICP is computed as an annual chain index allowing weights to be changed each year. HICP aggregates are calculated as weighted averages of the HICPs using the weights of the countries and sub-indices concerned. The weight of a country is its share of the household final monetary consumption expenditure in the euro-zone total. For the MUICP this is expressed in euro, for the EICP and the EEAICP it is expressed in purchasing power standards. The MUICP is treated as a single entity within the EICP and EEAICP starting from 1999.

Additional information

More information⁹ on HICPs can be obtained from the monthly publication Statistics in focus, Economy and Finance, Harmonized indices of consumer prices. About 100 MUICP, EICP, EEAICP and HICP sub-indices with corresponding weights are available in Eurostat’s database.

Future release dates

Provisional publication dates for the coming months are:

 1. Starting in January 2006 the Harmonized Indices of Consumer Prices are compiled on the basis of the new common index reference period 2005=100, as laid down in the Commission Regulation 1708/2005 (Official Journal L 274, 20.10.2005). The re-referenced series replace the old ones based on 1996=100 whose publication is discontinued. The only exception is the all-items index which for the moment is still available in Eurostat website in the old reference year. All other 1996=100 based HICPs are only available on request. The HICP country weights for 2006 and a summary table with revisions of historical inflation rates in the period from January 1996 to December 2005 are presented in an Annex (for more information on the 2005=100 reference year and new rounding rules, see Eurostat News Release 146/2005 - 16 November 2005).

1. The MUICP flash estimate for January 2006, published on 3 February 2006, was 2.4%.
2. EU25: Belgium (BE), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Greece (EL), Spain (ES), France (FR), Ireland (IE), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).
3. The EICP (EICP=’European Index of Consumer Prices’ as defined in Council Regulation (EC) No 2494/95 of 23 October 1995) is the official EU aggregate. It covers 15 Member States until April 2004 and 25 Member States starting from May 2004. The ten new Member States are integrated into the EICP starting from May 2004 using a chain index formula.
4. Measure used to determine price stability in Convergence reports of 1998, 2000, 2002 and 2004 by the Commission to the Council.
5. Finland has recently provided to Eurostat revised HICP data for the period from January 2005 to December 2005. That data arrived too late to be used for this release and it is currently being assessed by Eurostat. HICP data for January 2005 onwards for Finland should therefore be regarded as provisional. For January 2006, Eurostat estimates have been used for Finland in order to compute the euro-zone, EU and EEA indices, and the Finnish 12 month average rate.
6. The method used by the UK to re-reference to 2005=100 is different from that used by all other EU and EEA countries in that the UK has used unrounded index levels for rescaling and computed inflation rates from the unrounded re-referenced index series. The UK decided at a very late stage to use this method. Until the necessary controls are in place to ensure that the same data are published by Eurostat and ONS, Eurostat will only release the all-items index level and inflation rates for the UK. Eurostat applied the harmonized rescaling method (see footnote 1) to UK data for calculating EU and EEA aggregates.
7. See ECB press release, 8 May 2003.
8. For technical notes on HICPs see: Eurostat News Release 21/97, 5 March 1997, Harmonizing the way EU measures inflation and Eurostat Memo 8/98, 4 May 1998, New monetary union index of consumer prices (MUICP), Eurostat Memo 02/00, 18 February 2000, Improved EU Harmonized Index of Consumer Prices: Extended coverage and earlier release dates for the HICP, and HICP short guide for users.

ANNEX

HICP country weights for 2006