Opinion of the European Central Bank

of 24 November 2000

at the request of the Commission of the European Communities on two draft Commission Regulations (EC) laying down detailed rules for the implementation of Council Regulation (EC) No 2494/95 as regards minimum standards for the treatment of price reductions and as regards the timing of entering purchaser prices into the harmonised index of consumer prices

(CON/00/27)

(2000/C 362/11)

1. On 19 October 2000 the European Central Bank (ECB) received a request from the European Commission for an ECB opinion on two draft Commission Regulations (EC) concerning minimum standards for the treatment of price reductions and the timing of entering purchaser prices into the harmonised index of consumer prices (HICP).

2. The ECB's competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and Article 5(3) of Council Regulation (EC) No 2494/95 of 23 October 1995 concerning harmonised indices of consumer prices. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, this ECB opinion has been adopted by the Governing Council of the ECB.

I. Draft Regulation concerning minimum standards for the treatment of price reduction

3. The objective of the draft Regulation is to establish minimum standards for the treatment of price reductions in the HICP. Temporary price reductions, such as summer and winter sales, may have a significant impact on the index result in the period concerned and differences in their treatment may affect the comparability of the HICP.

4. The draft Regulation defines the conditions under which price reductions are to be reflected in the HICP (related to the purchase of individual products, non-discriminatory, known and available at the time of purchase; Article 2). It also defines the conditions under which the implementation of the Regulation leads to a revision of previous data (change in annual rate of more than one-tenth of one percentage point; Article 6(1)). The ECB agrees with these proposals.

5. The draft Regulation leaves open whether or not the price reductions must hold a minimum time interval in order to be taken into account in the HICP computation. The ECB urges Eurostat to ensure a fully comparable implementation of the provision on price reductions.

6. The ECB welcomes the requirement in Article 6(2) that general provisions concerning revisions of the HICP shall be adpopted in future.

II. Draft Regulation concerning the timing of entering purchaser prices into the HICP

7. The objective of the draft Regulation is to harmonise the timing of entering prices into the HICP. This is important in particular where there is as difference between the time of purchase and the time of payment, delivery or consumption.

8. For goods, the draft Regulation requires that prices shall be recorded in the HICP for the month in which they are observed and the goods may be purchased by the consumer, regardless of the time of payment, delivery or consumption. The ECB agrees with this proposal.

9. For services, the draft Regulation requires that prices shall be entered into the HICP for the month in which the consumption of the service can commence. This may be later than when the price (price change) is announced by the supplier or agreed between supplier and consumer in a transaction, and is conceptually not fully consistent with the proposed treatment for goods. However, it may lead in practice to a more transparent and comprehensible outcome than alternative options. Moreover, the proposed rule follows the practice in most Member States. The ECB can therefore accept the proposal.

10. This ECB opinion shall be published in the Official Journal of the European Communities.

Done at Frankfurt am Main, 24 November 2000.

The President of the ECB

Willem F. Duisenberg