Monthly Labor Review • February 2007 23

Research Summary

International comparisons 

of Harmonized Indexes of 

Consumer Prices

Jessica R. Sincavage

In October 2006, the Bureau of Labor Statistics (BLS, the Bureau) introduced a new table to its Web site. 

The new table, “Harmonized index of 

consumer prices for selected countries 

and areas, percent change from same 

period of previous year, 2003–06,” 

uses the methods of the European 

Union’s Harmonized Index of Consumer Prices (HICP) to compare inflation rates of all G7 countries except 

Canada.1 The table also displays data 

for two transnational aggregates, one 

for the European Union (EU) and the 

other for the Euro area.2 The table, 

which is available at http://www.bls.

gov/fls/home.htm, will be updated 

monthly on the same schedule as the 

BLS Employment Situation news release, which typically is issued on the 

first Friday of each month.3 These 

harmonized indexes provide a better 

basis for international comparisons of 

inflation than the national CPI data 

published by each country.

Background

For many years, the Bureau has produced a monthly table showing the 

national Consumer Price Indexes 

(CPI’s) for nine countries. The table 

contains percent changes as the national statistical agencies publish 

them.4 Because each country proJessica R. Sincavage is an economist in 

the Division of Foreign Labor Statistics, 

U.S. Bureau of Labor Statistics. E-mail: 

Sincavage.Jessica@bls.gov

duces its CPI with its own unique 

methods and concepts, the data presented in the table are not strictly 

comparable. The Bureau will continue 

to publish this table, in part because it 

covers additional countries.

The HICP is an internationally 

comparable measure of consumer 

price inflation.5 The EU’s statistical 

agency, Eurostat, developed the 

HICP’s methods. The EU requires 

member countries and prospective 

member countries to produce an 

HICP. Most EU countries continue 

to produce their national CPI’s for 

internal and historical purposes.6 The 

growth of the EU and the integration 

of much of the European economy 

under a single currency necessitated a 

common measure of inflation among 

the member countries. Indeed, many 

EU programs and policies depend on 

such a measure. The European Central 

Bank, which manages the euro in 

the same manner that the Federal 

Reserve System manages the U.S. 

dollar, needs a comparable measure 

of inflation to conduct monetary 

policy. Also, having a common 

measure of inflation is needed for 

meaningful comparisons of countries’ 

growth and productivity across the 

EU and, in addition, in comparing 

EU countries with other countries in 

the world. Eurostat publishes HICP

data back to 1996 for each member 

state as well as aggregate indexes 

with varying geographical coverage.7

HICP for the United States

The Bureau recently published an 

experimental HICP series for the 

United States.8 The most important 

difference between the U.S. CPI and 

the HICP is that the latter excludes 

owner-occupied housing from its 

scope. CPI methods for owner-occupied housing vary widely and the 

Europeans could not agree on which 

to use so they simply excluded this 

item from the HICP.

9

 A second difference is that the HICP refers to the 

entire national population, whereas 

the U.S. CPI, the Consumer Price Index for All Urban Consumers (CPIU), measures inflation for the 87 percent of U.S. population who live in 

urban areas. The Bureau created the 

experimental HICP for the United 

States by expanding the U.S. CPI’s

population coverage to the entire 

(noninstitutional) population and by 

excluding owner-occupied housing 

from its item coverage.

Although some minor differences 

remain between the experimental 

U.S. HICP and the European HICP’s, 

the U.S. HICP is more comparable to 

its counterparts in other countries 

than the U.S. CPI is to other national 

CPI’s. International comparisons 

of the HICP’s are more meaningful 

than international comparisons of 

national CPI’s. As the following information shows, the movement of 

the U.S. HICP has differed from that 

of the U.S. CPI in the past few years.

Japan

The main series of Japan’s CPI that 

is published monthly (the General 

Index) includes all households with 

two or more persons, therefore excluding 1-person households.10 In 

2000, 1-person households made 

up 26.5 percent of all households in 

Japan, and this percentage increased 

over the period from 1980 to 2000.11

The Japanese Statistics Bureau also 

calculates a CPI called General, excluding imputed rent. Although the 

index excluding imputed rent also 

excludes 1-person households, it is 

more closely comparable to the HICP

In the original posting of this article, the data for charts 2 and 3 were inadvertently transposed. 

Both charts were corrected on April 27, 2007.
Research Summary

24 Monthly Labor Review • February 2007

 

 Relative importance, Unadjusted percent change 

 Expenditure category December 2005 from July 2005–July 2006 

 

All items ............................................................................... 100.000 4.1

Housing................................................................................. 42.380 4.1

Lodging away from home ..................................................... 2.611 4.7

Owner’s equivalent rent of primary residence ...................... 23.442 3.7

Transportation....................................................................... 17.415 8.4

Motor fuel.............................................................................. 4.191 29.4

Airline fare............................................................................. .673 5.4

Relative importance and percent changes for selected expenditure categories in the CPI-U

Chart 1. Trends in U.S. Harmonized Indexes of Consumer Prices (HICP) and Consumer Price Index (CPI), 

2003–06, percent change from previous year

Percent change

2003 2004 2005 2006

U.S. HICP

U.S. CPI

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0 5.0

4.5

4.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

NOTE: Percent changes calculated from July to July.

SOURCE: U.S. Bureau of Labor Statistics.

than the General Index.12 

Data

Although HICP data for the EU

countries are available from 1996 

to the present, and comparable data 

are available for Japan as far back 

as 1946, HICP data for the United 

States are available only beginning in 

December 2001.13 

For the United States, the HICP

increased faster than the CPI in each 

year from July 2003 to July 2006. 

(See chart 1.) 

When owner-occupied housing is 

removed to create the HICP, the other index components take on a larger 

relative importance. The index for 

owner-occupied housing has been 

increasing more slowly than the indexes for other CPI components, such 

as energy or transportation. When 

these other items account for a larger 

Table 1.

Percent change
Monthly Labor Review • February 2007 25

 Harmonized Indexes of Consumer Prices for selected countries, July 2002–July 2006

United States

Japan

France

Germany

Italy

United Kingdom

120.0

115.0

110.0

105.0

100.0

95.0

120.0

115.0

110.0

105.0

100.0

95.0

Index Index

SOURCE: U.S. Bureau of Labor Statistics, Japanese Statistics Bureau, and Eurostat.

July 2002 July 2003 July 2004 July 2005 July 2006

[December 2001 = 100]

Chart 3. National Consumer Price Indexes for selected countries, July 2002–July 2006

United States

Japan

France

Germany

Italy

United Kingdom

[December 2001 = 100]

120.0

115.0

110.0

105.0

100.0

95.0

Index

120.0

115.0

110.0

105.0

100.0

95.0

Index

July 2002 July 2003 July 2004 July 2005 July 2006

SOURCE: U.S. Bureau of Labor Statistics, Japanese Statistics Bureau, and Eurostat.

Chart 2.
Research Summary

26 Monthly Labor Review • February 2007

percentage of the overall price index, 

the effect is an increase in the index. 

In addition, the HICP includes 

the rural population; the weight for 

transportation is higher in rural areas than in urban areas. During the 

period covered, the index for transportation, which includes motor fuel 

and airline fares, increased rapidly. 

Overall, from July 2005 to July 2006, 

the CPI for transportation increased 

8.4 percent, while the all-items CPI

increased 4.1 percent. (See table 1.) 

As a result of both adjustments, the 

HICP increased more rapidly than 

the CPI from July 2002 to July 2006. 

As the HICP indicates, measured 

prices in the United States rose more 

than prices in the other G7 countries over a recent 4-year period. (See 

chart 2.) 

The U.S. HICP has experienced 

the greatest increase since July 2002 

of any of the countries shown in the 

graph. The United States experienced 

price increases similar to that of Italy 

and France from July 2002 until the 

third quarter of 2004, at which point 

prices in the United States began increasing more rapidly. Germany and 

the United Kingdom both experienced inflation during this period, 

although to a lesser extent than the 

United States. By contrast, Japan’s 

consumer prices were flat over this 

4-year period. 

When national CPI’s are used to 

compare price changes among these 

countries, the results are different in 

some respects. (See chart 3.) In particular, the United Kingdom appears 

to be experiencing price increases 

similar to that in the United States; 

however, as stated earlier, this similarity is misleading because the concepts and methods of the U.S. and 

U.K. national CPI’s differ.14 The other 

countries’ national CPI trends differ 

only slightly, on average, from their 

HICP trends.

ACKNOWLEDGMENT: The author thanks 

Walter Lane, Chief, Branch of Consumer Prices, 

BLS Office of Prices and Living Conditions; Constance Sorrentino, Chief, Division of Foreign Labor Statistics; and Erin Lett, economist, in the 

same Division.

1 G7 countries include the following: the United States, Canada, Japan, France, Germany, Italy, 

and the United Kingdom. Canada is not included 

on the table because there is no Canadian price index comparable to the HICP at this time.

2 The column entitled “European Union” refers 

to EU member countries as of May 1, 2004, also 

referred to as the EU-25. The EU-25 index is the 

household expenditure-weighted average for Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, 

Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, 

Slovakia, Slovenia, Spain, Sweden, and the United 

Kingdom. The column entitled “Euro area-12” refers to the European Union member countries that 

have adopted the euro as the common currency. 

The index for this group is the household expenditure-weighted average for Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

3 The table is available at www.bls.gov/fls/

home.htm. For a schedule of upcoming releases, 

see www.bls.gov/schedule/schedule/by_prog/

empsit_sched.htm.

4 In some cases, percent changes published by 

the national statistical agencies are based on more 

precise index level data and, therefore, may differ 

slightly from the percent changes calculated by the 

BLS. 

5 For more information, see www.epp.

eurostat.ec.europa.eu/portal/page?_pageid=1996,45323734&_dad=portal&_

schema=PORTAL&screen=welcomeref&open=/

&product=EU_MASTER_prices&depth=2.

6 The European Union member countries are 

required to produce an HICP according to Article 

121 of the Treaty of Amsterdam (Article 109j of 

the Treaty of the European Union).

7 See note 5. 

8 The Bureau uses the term “experimental,” in 

contrast to “official,” to denote series that it produces outside of its regular production systems 

and, consequently, with less than full production 

quality. For security reasons, BLS researchers cannot produce experimental statistics until after the 

publication of the corresponding official statistics. 

For more information, see Walter Lane and Mary 

Lynn Schmidt, “Comparing U.S. and European 

inflation: the CPI and the HICP,” Monthly Labor Review, May 2006, pp. 20–27.

9 Ibid. 

10 Japan also calculates a supplementary index covering “total households” including 1-person 

households, but this index is calculated on an annual 

basis only and is not the index used in BLS international comparisons. This information was obtained 

from e-mail correspondence with the Japanese Bureau of Statistics, dated July 10, 2006.

11 See Gary Martin and Vladimir Kats, “Families and work in transition in twelve countries, 

1980–2001,” Monthly Labor Review, September 

2003, table 5, p. 12.

12 Besides the exclusion of 1-person households, 

other differences may exist, for example, with respect to frequency of market basket weight changes, 

aggregation methods, and quality adjustments.

13 For the period from December 1997 to December 2001, Consumer Price Index data excluding 

owner-occupied housing are available. However, 

these data are for the urban population only. Rural 

weights are first available for December 2001, the 

base month for the U.S. HICP. 

14 The index that the Bureau uses for the United 

Kingdom in international comparisons of national 

CPI’S is the Retail Price Index (RPI), which is the 

index that is most comparable to the U.S. CPI. In 

the United Kingdom, the HICP is known as the CPI. 

For more information on the differences between 

the U.K. CPI and the RPI, see www.statistics.gov.uk/

cci/nugget.asp?id=181. For more information on 

the methodology of the RPI, see www.statistics.gov.

uk/cci/nugget.asp?id=22.

Notes