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. ««7 * •ix TV COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 27.02.1998 
COM(1998) 104 final 
REPORT FROM THE COMMISSION TO THE COUNCIL 
ON HARMONIZATION OF CONSUMER PRICE INDICES 
IN THE EUROPEAN UNION 
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TABLE OF CONTENTS 
Table of Contents 2 
Abbreviations used in the Text 4 
List of Tables 6 
Executive Summary 7 
1. Introduction 9 
2. Costs ; 9 
3. Background 10 
4. Comparability and main differences 10 
5. Approach towards establishing rules for Commission Regulations 11 
6. Implementation of the Council Regulation 12 
6.1. Stage 1 of the harmonization process: January 1996 12 
6.2. Stage 2 of the harmonization process: January 1997...: 13 
6.2.1. Initial coverage 14 
6.2.2. Newly significant goods and services 14 
6.2.3. Minimum standards for procedures of quality adjustment 15 
6.2.4. Minimum standards for prices 16 
6.2.5. Price indices for elementary aggregates 17 
6.2.6. Minimum standards for sampling 17 
6.2.7. Transmission and dissemination of sub-indices of the HICP 18 
6.2.8. Common reference periods 19 
6.3. The EICP and the MUICP 19 
6.4. HICP data disseminated by the Commission (Eurostat) 20 
7. Derogations from the provisions of the HICP Council Regulation 21 
8. Further steps towards harmonization 22 
8.1. Extended coverage 22 
8.2. Minimum standards for the quality of HICP weights 24 
8.3. Geographic and population coverage 24 
8.4. Comprehensive Definition ofHICPs ". 25 
9. Enlargement of the EU 26 
10. The HICP - a comparable measure of Consumer Price inflation 27 
10.1. Improved comparability 27 
10.2. Comparability and coverage 28 
10.3. Differences between CPIs and HICPs 29 
t>age 2d 
11. Reactions from users, media, and Member States 30 
11.1. Opinion of the European Monetary Institute (EMI) 30 
11.2. Opinion of the Directorate General for Economic and Financial Affairs of the 
European Commission (DGII) 31 
11.3. Summary opinion of Member States.. 31 
12. Compliance and quality control 32 
12.1. Specific changes made by Member States 33 
12.2. Coverage 34 
12.2.1. Interim indices launched 29 February 1996 34 
12.2.2. HICPs launched 7 March 1997 36 
12.2.3. HICP versus CPI coverage 37 
12.3. Weighting 40 
12.3.1. Quality of weights 40 
12.3.2. Weight reference period 40 
12.4. Sub-index weights , 41 
12.5. Newly significant goods and services 42 
12.6. Elementary aggregate formula .43 
12.7. Quality adjustment 45 
12.8. Sample design and maintenance 48 
12.8.1. Sampling and comparability 48 
12.8.2. Statement of the target sample and maintenance 51 
13. Operation of the Procedure under Article 14 of Council Regulation (EC) No 2494/95 
("Comitology") 54 
Annex :..... .56 
page 3< 
ABBREVIATIONS USED IN THE TEXT 
A : Austria 
B Belgium 
BUL Bulgaria 
COICOP Classification Of Individual Consumption by Purpose 
COICOP/HICP COICOP adapted for the needs of HICPs 
CPI Consumer Price Index 
CPIs Consumer Price Indices 
CYP Cyprus 
CZE Czech Republic 
D Germany 
DGII Directorate General for Economic Affairs of the European Commission 
DK Denmark 
E Spain 
EC European Community 
ECU European Currency Unit 
EICP European Index of Consumer Prices 
EL Greece 
EMI European Monetary Institute 
ESA 1995 European System of Accounts of 1995 
EST Estonia 
EU European Union 
F France 
FIN Finland 
HFMCE Household final monetary consumption expenditure 
HICP Harmonized Index of Consumer Prices 
HICPs Harmonized Indices of Consumer Prices 
HUN Hungary 
I Italy 
IRL Ireland 
IS Iceland 
L Luxembourg 
LTU Lithuania 
LVA Latvia 
Member States for the purposes of this report refers to the EU Member States (B, DK, 
D, EL, E, F, IRL, I, L, NL, A, P, FIN, S, UK) plus N and IS 
page 44V* 
MU Monetary Union 
MUICP Monetary Union Index of Consumer Prices 
N Norway 
NL Netherlands 
OECD Organisation for Economie Co-operation and Development 
OJ Officiai Journal of the European Communities 
P Portugal 
POL Poland 
ROM Romania 
S Sweden 
SPC Statistical Programme Committee 
SVK Slovak Republic 
SVN Slovenia 
TEU Treaty on European Union 
UK United Kingdom 
UN-ECE Economic Commission for Europe of the United Nations 
page 5J 
LIST OF TABLES 
Table 1: Overview of available HICP data 
Table 2: Assessment of compliance with HICP requirements in the Candidate Countries: 
Initial coverage 
Table 3: Expenditure excluded from national CPIs when computing the interim indices -
approximate weights per 1000 (January 1996) 
Table 4: Categories which have been added to national CPIs when computing the interim 
indices 
Table 5: Categories which have been excluded from national CPIs when computing the 
interim indices 
Table 6: Sub-indices introduced for the compilation of the HICPs - approximate weights per 
1000 (Annual 1996) 
Table 7: HFMCE covered by the HICP compared to national CPI coverage - approximate 
weights per 1000 (Annual 1996) 
Table 8: HICP weight reference periods and update frequencies in 1997 
Table 9: Newly significant goods and services since January 1997 
Table 10: Computation of elementary aggregates in the HICP 
Table 11 : Sampling of geographical localities and outlets in Member States 
Table 12: Sampling of items and varieties in Member States 
Table 13: Monthly and less frequent price observation for the HICP as specified in the target 
samples of Member States 
Table 14: Total number of items and price observations for compiling the HICP as specified 
in the target samples of Member States 
Table 15: Sub-index weights of the HICP as part per 1000 (Annual 1996) 
page 
EXECUTIVE SUMMARY 
As required by Council Regulation (EC) No 2494/95 and with the co-operation of Member 
States "Harmonized Indices of Consumer Prices" (HICPs) for each Member State are now 
produced and published monthly together with an aggregated index, the "European Index of 
Consumer Prices" (EICP). These indices have been accepted by both the Commission and the 
European Monetary Institute as providing satisfactory measures for the assessment of 
convergence. Although certain differences in their constructions remain to be fully harmonized 
considerable progress has been made in removing differences in the concepts, methods and 
practices followed by Member States in constructing their national Consumer Price Indices 
(CPIs). Those indices continue to be published in most cases and used in national contexts. 
Their construction will reflect improved practices developed in the harmonization process but 
their use for international comparisons is peripheral. The Commission and the European 
Monetary Institute are looking for further improvements in the quality and comparability of the 
HICPs for their use in monetary policy and the monitoring of inflation in the Economic and 
Monetary Union. 
The HICPs have a common reference base 1996, common coverage of consumer goods and 
services and a common classification so that inflation can now be compared for around 100 
categories of expenditure. The new indices are required to take account of inflation in new 
goods and services, particularly those resulting from technical innovation. Important sources of 
difference in the basic computational procedures have been removed. These relate to the 
representativity of the monthly collection of prices, the treatment of missing observations, 
allowance for changes in the quality of products available for pricing and to the formula used 
to combine the prices observed to give an overall measure. 
Quality adjustment is widely accepted among experts as one of the most, if not the most, 
intractable problems in CPI construction. The problem is not widely appreciated and many 
observers share the mistaken impression that no allowances are made for improvements that 
have occurred in product quality thus leading to an overstatement of inflation. In practice man;, 
different adjustments have been made as index compilers have attempted to solve the problems 
in different ways and these may, just as likely, have resulted in an over compensation for such 
improvements. As a result, this remains the most important source of non-comparability amor.: 
HICPs. Short term their comparability has been improved by banning one frequently used but 
inappropriate procedure for treating changing product quality. Further improvement can be 
expected as a result of a co-ordinated programme of work among Member States. This h.i-
already thrown much light on specific operational issues that must be resolved before 
comparable practices can be established. 
The samples of prices used in the construction of HICPs differ widely in design and in the 
methods and practices followed. This gives rise to concern that the indices may be non-
comparable on this count. It is however not possible to say that any particular HICP i> 
unsatisfactory as there are no yardsticks by which to make such judgement. The-Commission 
(Eurostat) is working with Member States on a programme of research designed to provide an 
empirical assessment of different sampling methods and to develop measures of the reliability 
of HICPs. The research is making good progress but is confronted with many difficult issues 
which have not hitherto been addressed. Meanwhile, Member States are required to ensure that 
their samples are representative of all categories of expenditure covered by the HICP and are 
maintained at the level of January 1997. 
page 7] 
No single CPI or set of CPIs should be taken as a model for what HICPs should cover. The 
coverage of the HICPs is fairly comprehensive but some further extension is desirable. The 
incidence of very different institutional arrangements for the delivery of health and education 
has meant that it has not been possible to say at this stage how important this omission is in the 
provision of comparable measures of inflation as it affects consumers. Clearly individual 
consumers are unaffected when total costs rise if any payments they make are reimbursed. 
Other desirable extensions to coverage are social protection services and further insurance 
services which are not so far included. Harmonization of the geographic and population 
coverage is also being pursued as a matter of urgency. Some Member States have broadened 
their coverage from that of their CPIs to bring them into line with the majority but there remain 
questions over the coverage of tourist expenditure and institutional households. 
The HICPs cover owner occupiers' repairs and maintenance costs, dwelling content insurance, 
refuse collection, sewerage services, water supply, and other services related to the dwelling. 
Work will be undertaken to develop an appropriate measure for inclusion but at this time only 
a few counties have the necessary data. The omission from the HICPs of imputed rents (the 
rent paid for an equivalent dwelling) included in some national CPIs or of mortgage interest 
payments included in other CPIs has been criticised but is justified on the grounds that neither 
of these represents the impact of inflation on owners; the first is an opportunity cost rather than 
an actual cost and the latter is the cost of borrowing rather than consumption. 
page 8^ 
1. INTRODUCTION 
On 23 October 1995, the Council of Ministers adopted a regulation1 setting the legal basis for 
the establishment of a harmonized methodology for compiling consumer price indices (CPIs) in 
EU Member States. 
Council Regulation (EC) No 2494/95 concerning Harmonized Indices of Consumer Prices 
(HICPs) laid down a stepwise approach in two stages, each step requiring specific 
implementing measures which were and will be, where necessary, legislated in the form of 
Commission Regulations. Regarding the process for implementing HICPs it should be stressed 
that the Council Regulation foresaw a procedure with the Statistical Programme Committee 
(SPC) acting as Regulatory Committee. 
Within this framework, rules as well as guidelines or non-obligatory statements of good 
practice have been drawn up in collaboration with Member States for the construction of 
HICPs. To date, two Commission Regulations2 (EC) No 1749/96 and No 2214/96 have been 
adopted by the Commission. Further regulations are currently in various stages of preparation. 
Furthermore, a Community-wide index3 based on the HICPs as well as an index measuring the 
average inflation rate of the members of the Monetary Union4 have been defined. In doing so, 
due regard was and will be paid to the primary purpose of the KICPs to provide comparisons 
of inflation in the macro-economic context. 
The production of a consumer price index is an elaborate and sensitive operation. Many of the 
necessary changes were agreed in lengthy discussions and required substantial preparation. The 
calculation of the HICP has in some cases required additional processing systems in order to 
avoid any risk of confusion with the existing CPI. The HICP Council Regulation and the 
number of specific implementing measures which have been legislated or submitted to the SPC 
during a period of only three years, provide enough evidence for the difficulty of the issues 
involved in the compilation of HICPs. 
2. COSTS 
The additional costs the Member States incurred in implementing the requirements laid down 
in the HICP Council Regulation, and specified in Commission Regulations, have been 
recognised by the Commission, and a Commission Decision (C(96) 2452) was adopted in 
September 1996 allocating 3 million ECU to the Member States over ?. two-year period for 
this purpose. This followed earlier disbursements to Member States amounting to 670000 
ECU. 
Although the Commission (Eurostat) took greatest account of cost-effectiveness and made full 
use of all possible budgetary resources to finance the HICP project, the funding might in some 
Member States not have covered two-thirds of the actual additional cost for the 
implementation of the HICPs as required in Article 13 of the HICP Council Regulation. 
Council Regulation (EC) No 2494/95, OJ No L 257/1, 27.10.95 
: OJ No L 229/3, 10. 9. 1996, and OJL 296/8, 21.11.1996 respectively 
European Index of Consumer Prices (EICP) 
4 Monetary Union Index of Consumer Prices (MUICP) 
page 9jp 
3. BACKGROUND 
Protocol No 6 that develops Article 109 (j) (1) of the Treaty on European Union (TEU) states 
that "inflation shall be measured by means of a consumer price index on a comparable basis, 
taking into account differences in national definitions." This requirement is being met through 
the implementation of HICPs which are as far as possible based on national CPIs. 
The compilation of any CPI consists of collecting and processing price and expenditure data 
according to specified concepts, definitions, methods and practices. Concepts relate to the 
essential aims of the CPI. The underlying conceptual basis of a CPI will usually be expressed in 
general terms (if it is expressed at all). CPIs are sometimes in some Member States referred to 
as "cost-of-living indices" or as "pure price indices". The latter may be seen as a general 
measure of consumer price inflation whereas the purpose of the former might be for 
establishing the purchasing power of incomes. In practice there are significant overlaps 
between the two concepts. 
Recognising that HICPs cannot measure all aspects of inflation but only one of its components, 
the preamble to the HICP Council Regulation includes the following phrase: "... it is 
recognised that inflation is a phenomenon manifesting itself in all forms of market transactions 
including capital purchases, government purchases, payments to labour as well as purchases by 
consumers ...". Article 3 of the HICP Council Regulation defines that the "HICP shall be based 
on the prices of goods and services available for purchase in the economic territory of the 
Member State for the purposes of directly satisfying consumer needs." Hence, the HICP is a 
"pure price index" the aim of which is to measure consumer price inflation. HICP is designed 
to cover the actual prices of goods and services faced by consumers. The underlying concept 
of the HICP is therefore defined as "final monetary consumption expenditure of households". 
The HICPs are not intended to replace national CPIs. Many Member States are likely to 
continue their existing CPIs for domestic purposes, such as indexation or wage bargaining, 
although the HICP may be used for such purposes. This is in line with what was recognised at 
the outset of the HICP Council Regulation, where it is stated that "comparable indices may be 
produced instead of or in addition to similar indices of consumer prices already produced or to 
be produced in future by Member States." In some Member States there are legal or 
institutional barriers to using indices other than the national CPIs for such purposes. For these 
countries change may be a long process, but national CPIs will nevertheless incorporate several 
technical improvements introduced for the HICPs. 
4. COMPARABILITY AND MAIN DIFFERENCES 
CPIs have been developed for domestic purposes by each Member State and while they have-
much in common there are important differences in concepts and methods on which there are 
few universal agreements. CPIs are neither "right" nor "wrong"; they serve the multiple 
purposes for which they were designed to a greater or a lesser extent. National CPIs are the 
tools which their users are used to. As the HICPs differ from national CPIs in their concepts, 
definitions, methods and practices it is misleading to compare directly national CPIs with the 
HICPs. 
In the harmonization project the focus lies on comparability among the HICPs of the different 
Member States as well as their relative movements. The criterion for deciding when indices 
should be accepted as comparable and when not was written into the HICP Council Regulation 
as the "comparability requirement" (Article 4). It reads as follows: 
page 10^ 
"HICPs shall be considered to be comparable if they reflect only differences in price 
changes or consumption patterns between countries. 
HICPs which differ on account of differences in the concepts, methods or practices used 
in their definition and compilation shall not be considered comparable. 
The Commission (Eurostat) shall adopt rules to be followed to ensure the comparability 
of HICPs under the procedure laid down in Article 14." 
The (draft) Commission Regulation(s)5 which lay down the detailed implementing measures 
define the comparability requirement in a more operational way as a "change in the HICP by 
more than 0.1 percentage points on average over one year against the previous year". This 
limit was accepted by Member States as a criterion for harmonizing non-comparable practices. 
The HICPs can all be said to meet their purposes of "measuring inflation faced by consumers" 
to a degree which is unknown (and perhaps unknowable) because there is no reference by 
which to determine the extent of any bias. It is, however, possible to say whether the 
differences between two HICPs are due to differences in methods of compilation and it is 
sometimes possible to estimate how large the differences might be. 
5. APPROACH TOWARDS ESTABLISHING RULES FOR COMMISSION 
REGULATIONS 
Implementation has to take place taking account of cost-effectiveness (Article 13 of HICP 
Council Regulation), remaining proportional to the aim pursued (Article 3 (b) EC-Treaty, last 
sentence) and respecting subsidiarity (Article 3 (b) EC-Treaty). 
As far as possible, the Commission Regulations which implement the detailed rules are based 
on the best of current practices allowing for precedent and legal and institutional circumstances 
existing in Member States. No single national CPI could be said to be the model that should be 
followed by all Member States. There is no right answer in the sense of a general agreement 
about what should be computed. Existing CPIs have been designed to meet a range of 
purposes and have been developed in different contexts. 
The general approach to the implementing regulations could be characterised by the term 
"minimum standards". "Minimum standards" in the sense that banning acknowledged bad 
practices has the effect of not only achieving convergence on good practices but also raising 
the general level of standards and, on the other hand, in the sense that the regulations generally 
specify outputs rather than inputs. They say what is required rather than how to achieve the 
requirement, the detail of which is left to Member States, sometimes in agreement with the 
Commission (Eurostat). 
More specifically, the criteria which are being followed in determining rules are: 
(a) Necessity - Rules should be made only where there is evidence that non- comparability 
may arise in the absence of such rules. Otherwise the principle of subsidiarity applies. 
See Article 7 of Commission Regulation (EC) No 1749/96 and Article 3 (4) of the draft Commission 
Regulation concerning minimum standards for the quality of HICP weights 
pagell^ 
(b) Practicability - Rules should be made only where National Statistical Institutes (NSIs) 
can generally accept them and are able to follow what is required. It should also be 
possible to monitor the application of the rules in order to ensure compliance. 
(c) Specificity - Rules should be clear, unambiguous and suitably restrictive in order to 
ensure comparability but should be sufficiently general as to allow variations in practices 
as long as these do not result in non-comparability. 
(d) Coherence - Rules should not conflict with or contradict other rules or guidelines. 
(e) Completeness - Taken together, rules and guidelines should cover all that has to be done 
in constructing HICPs. Where it is deemed unnecessary to harmonize existing practices 
the bounds of those practices should nevertheless be defined. 
(f) Best practice - Where possible, rules should follow the best of existing practices so long 
as these can be applied across the Union. 
(g) Efficiency - The costs of following the rules should not exceed what is necessary to 
achieve comparable HICPs. The cost, over and above existing costs, should be identified 
and arrangements for meeting such costs agreed between the Commission and NSIs 
before the rules are adopted. 
6. IMPLEMENTATION OF THE COUNCIL REGULATION 
Article 5 of the HICP Council Regulation committed Member States to a staged process of 
implementation as follows: 
"(a) Stage I: 
By March 1996 at the latest, the Commission (Eurostat) shall, in collaboration with Member 
States, produce for the purposes of the report referred to in Article 109 (j) of the Treaty 
("convergence criteria") an interim set of consumer price indices for each Member State. These 
indices shall be based wholly on data underlying existing national consumer price indices, 
adjusted in particular as follows: 
i) to exclude owner-occupied housing; 
ii) to exclude health and educational services; 
iii) to exclude certain other items not covered or treated differently by a number of 
Member States; 
(b) Stage n: 
The HICP shall start with the index for January 1997. The common index reference period 
shall be the year 1996. The estimates of price changes for the twelve months to January 1997 
and subsequent months shall be established on the basis of the indices for 1996." 
6.1. Stage 1 of the harmonization process: January 1996 
On 29 February 1996, the Commission (Eurostat) launched6 the interim set of CPIs referred to 
in Article 5 (1) (a) of the HICP Council Regulation. These interim indices were based entirely 
on existing national CPIs, adjusted solely so as to make the coverage of goods and services as 
similar as possible . National CPIs were thus coincident with the corresponding interim indices 
News Release No 15/96, Eurostat, 29 February 1996 
Details are given in paragraph 12.2.1. 
page 12^ 
regarding methods, concepts and definitions apart from the coverage of goods and services. 
They therefore provided a better basis of comparison of consumer price inflation than the 
unadjusted national CPIs, and were used by the Commission and the European Monetary 
Institute in their first convergence reports to the Council in 1996. 
Certain categories of expenditure were excluded where, in the time available, it was impossible 
to reach agreement on how best to construct comparable measures. In particular, the 
expenditure faced by owner occupiers' when acquiring housing, not covered in some countries, 
measured by imputed rents in others, and by mortgage interest payments in the rest, was 
entirely excluded. Expenditure on health and education was also excluded because of major 
institutional differences between countries in the ways in which consumers pay for such 
services, either directly or via taxes. As well as excluding certain items, some other categories 
of expenditure that are not in some national CPIs - in particular, alcoholic drink and tobacco -
were included for all Member States. 
The interim indices were compiled for just one year by all EU Member States, Iceland, 
Norway, and Switzerland8. As required by the Council Regulation, HICPs started with the 
index for January 1997. 
6.2. Stage 2 of the harmonization process: January 1997 
On 7 March 1997 the Commission (Eurostat) published the first set of Harmonized Indices of 
Consumer Prices (HICPs) as required by Article 5 (1) (b) of the HICP Council Regulation9. 
In contrast to the interim indices, the HICPs are harmonized in several methodological areas as 
well as coverage. The HICPs do not simply expand the interim indices, as the HICP is a new 
and different index. 
The HICPs will in general be subject to retrospective revisions. However, during the crucial 
period for the decision on Stage III of Monetary Union, no revisions will be required in the 
calculation of the HICP and any revisions proposed by Member States to figures already 
published will not be applied by the Commission (Eurostat). Thus, with the publication of the 
index for December 1997 (in January 1998) until the publication of the index for December 
1998, index figures once published will not be changed. Retrospective revisions are again 
permitted with the publication of the index for January 1999. 
Under the HICP Council Regulation the Commission has so far adopted two detailed 
regulations establishing the specific implementing measures governing the production of the 
HICP; further draft regulations are in preparation. 
• Commission Regulation (EC) No 1749/96 on initial implementing measures, covers six 
technical areas: initial coverage, newly significant goods and services, elementary 
aggregates, and minimum standards for quality adjustment, sampling and prices. 
• Commission Regulation (EC) No 2214/96 relates to the HICP and its sub-indices that will 
be transmitted to and disseminated by Eurostat. 
• A draft Commission Regulation sets minimum standards for the quality of HICP weights. 
Liechtenstein does not calculate a national CPI and, hence, did not provide an interim index 
Details about the available data are given in paragraph 6.4 
page 13f 
• A second draft Commission Regulation amends Commission Regulation (EC) 1749/96 with 
regard to the coverage of goods and services and proposes a staged procedure on how to 
extend the coverage of the HICP. 
• A third draft Commission Regulation amends Commission Regulation (EC) 1749/96 with 
regard to the geographic and population coverage of the HICP. 
6.2.1. Initial coverage 
Article 3 of Commission Regulation (EC) No 1749/96 defines the initial coverage of-the 
HICPs in terms of a relatively new international classification of consumers' expenditure 
known as COICOP (Classification Of Individual Consumption by Purpose). A version of this 
classification has been specially adopted for the HICPs, known as COICOP/HICP10. It is based 
on the draft COICOP as adopted at a joint UN-ECE/OECD/Eurostat meeting on National 
Accounts held in Geneva 30 April to 3 May 1996. 
The weights assigned to each category of COICOP/HICP vary from country to country 
depending on the relative importance of consumers' expenditure on each good or service in 
each country. That means that there is no "uniform basket" applying to all Member States. This 
is in accordance with the comparability requirement set out in Article 4 of the HICP Council 
Regulation. 
The additions to coverage as compared with the interim indices11 of Stage 1 are, for example; 
insurances for cars and dwellings, package holidays, banking services, educational goods and 
services such as evening classes, and health goods that are obtainable without prescription12. 
However, some difficult categories, including most health and educational services, are still not 
covered by the HICP. 
A draft Commission Regulation amends Commission Regulation (EC) 1749/96 with regard to 
coverage and proposes to extend the coverage of the HICP in stages, starting in December 
1998 to include difficult categories such as health and educational services, where there are 
major institutional differences between Member States13. Owner occupiers' shelter costs, 
expressed as imputed rents or mortgage interest payments, are not regarded as part of the 
inflationary process and hence excluded from the HICPs. However, consideration is beir.t: 
given to the inclusion of the net acquisition prices of new dwellings. 
6.2.2. Newly significant goods and services 
CPIs are frequently criticised for failing to include new products such as mobile phones anJ 
personal computers. The requirement in the HICP Council Regulation (Article 5 (3)) to 
"maintain the relevance of HICPs" means that steps must be taken to ensure that these 
criticisms cannot be levelled against the HICPs. If some Member States add new products 
when they become a significant part of consumption but others fail to do so, it eould lead to 
significant differences in the measured rates of inflation. 
See also paragraph 6.2.7. 
See paragraph 6.1. 
Details are given in paragraph 12.2.2. 
See also paragraph 8.1. 
page 14-1 
Article 4 of Commission Regulation (EC) No 1749/96 ensures that HICPs keep broadly in step 
with each other and up-to-date in terms of market developments. In general, new products are 
incorporated in the HICP as soon as they achieve a sales volume of over 1 part per thousand of 
total consumers' expenditure in the Member State. Member States are required to build up a 
monitoring system for identifying newly significant goods and services from January 1997. 
Member States should make provision to identify new products and to report these to the 
Commission (Eurostat), which is acting as an information exchange, informing each country of 
the products newly included in other countries' HICPs14. It is not, however, a simple matter to 
define what newly significant items are or to formulate practicable procedures by which they 
can be identified. The requirement remains to be clarified in the process of its operation. 
6.2.3. Minimum standards for procedures of quality adjustment 
HICPs should measure "pure price change" unaffected by quality changes in the things which 
people buy. The prices taken for a HICP should therefore be adjusted for changes in the quality 
of the goods or services to which they relate. However, there is no universal agreement on just 
how this should be done and there are major differences between countries in actual practices. 
This is probably the largest single source of non-comparability15. 
Differences between CPIs may arise because the same change in the physical characteristics of 
an item are treated in quite different ways from one country to another. This is not to say that 
the same quality characteristic should be valued to the same extent in different Member States, 
only that the principles and procedures for valuation should be the same. Differences in 
practice do not "average out" across the goods and services covered by the indices; on the 
contrary, they are likely to cumulate to differences well in excess of 0.1 percentage points. 
Studies, which are continuing, on the different treatments of quality changes in motor vehicles 
suggest that this factor alone might lead to CPI effects greater than 0.1 percentage point on 
annual rates. 
Article 5 of Commission Regulation (EC) No 1749/96 requires Member States to examine 
quality adjustment procedures and to avoid "automatic linking", which is equivalent to the 
assumption that the difference in price between two successive "models" is wholly attributable 
to a difference in quality. If a Member State always assumes that a price increase from one 
"model" to another is due to a quality change and, therefore, reflects no price change in the 
CPI, this automatic linking may lead to underestimation of inflation and vice versa. Member 
States are required to change procedures to ensure that automatic linking is not used from 
January 1997. Non-automatic linking may continue to be used, i.e. where it can be justified 
that the price difference between the item and its replacement is equal to the quality difference. 
Furthermore, "overlap pricing" may be used, i.e. where a replacement is anticipated and prices 
are observed for the item and its replacement at the same time; the price difference in the 
overlap period is used as an estimate for the value of the quality difference. 
Member States need to be able to demonstrate that automatic linking is not used. Selective 
monitoring of implicit and explicit quality adjustments is required to establish comparable good 
Details arc given in paragraph 12.5. 
See for example the "Boskin Report": "Towards a more accurate measure of the cost of living", Final 
report to the United States Senate Finance Committee from the Advisory Commission to study the 
Consumer Price Index. Michael J. Boskin, Chairman et. al., 4 December 1996 
page 15] 
practices16. The Commission (Eurostat) will assist in this process by setting up a database of 
quality change estimates provided both by Member States themselves and from other sources. 
The problems of determining quality adjustments will require substantial further research. The 
Commission Regulation focuses attention on these problems as specific adjustments have to be 
made in the large number of situations where automatic linking has been used. The 
Commission (Eurostat) is supporting a programme of work to design appropriate adjustments 
for changes in the quality of goods and services the prices of which are used in the production 
of specific HICP sub-indexes. At present, research is concentrated on the development of 
quality adjustments for selected high-tech goods and the establishment of information for 
inclusion in a Eurostat central database of quality adjustments. 
6.2.4. Minimum standards for prices 
A widespread practice used in price estimation for CPIs is known as "carry-forward". 
Fieldwork price collection involves the observation of the price, usually each month, of a set of 
specified products in specified retail outlets. If, for any reason, a particular price cannot, or is 
not, collected, a common procedure is to simply use the price observed on the previous 
occasion - which may have been many months previously. 
The banning of the practice of "carry-forward" - which can lead to serious biases - is the main 
concern of Article 6 of Commission Regulation (EC) No 1749/96 which requires Member 
States to maintain their target sample from month to month. Sample maintenance is important 
because the aim is to measure price changes rather than price levels per se. Where prices are 
not observed they must be estimated by an appropriate procedure, and not by automatically 
carrying forward the last observed price. Member States should provide a statement of the 
"target sample" which is essentially the present plan for the number of prices that should be 
obtained and summary information on the numbers of missing prices for which estimates are 
substituted and on the estimation procedures17. 
Currently, the Commission Regulation leaves the following questions to be answered: 
• What are "non-appropriate estimates" for missing (or non-observed) prices? 
• What limit should be set on the number of estimates used (missing prices) to ensure 
comparability? 
The Commission (Eurostat) will carry out studies of the effects of estimation and will define 
the appropriate limit for the numbers of estimated prices and permissible procedures. Studies 
should enumerate and evaluate the various procedures used when prices are missing and others 
that might be used. Evaluation should take account of item replacement and quality adjustment 
issues. Ideally it should assess the scale of errors in actual estimates for missing prices but this 
would require some idea of what the "right answer" should be. An alternative approach is to 
make" a qualitative assessment of the assumptions that underlie different imputation procedures. 
It would, for example, be inappropriate to assume that the occurrence of missing prices is a 
random event, though this may not lead to unacceptable errors at least for one month. 
"' Details are given in paragraph 12.7. 
1 Details about the target samples are given in paragraph 12.8.2. 
page 16] 
6.2.5. Price indices for elementary aggregates 
Article 9 of HICP Council Regulation requires that the HICP shall be a Laspeyres-type index. 
Though the HICPs and CPIs produced by Member States may differ in detail, for example in 
the frequency of updating weights18, they can be broadly described as Laspeyres-type indices. 
That is, indices in which the month to month movements in prices are measured as an average 
of price indices using expenditure weights which are an appropriate reflection of the pattern of 
consumption of, and the structure of prices paid by, the index population in the weight 
reference period. 
However, the HICP Council Regulation does not define the formula to be used for the 
calculation of "elementary aggregates", which is the lowest level of detail for which 
expenditure weights are known. Elementary aggregates are computed by aggregating prices 
where there are no expenditure weights. Article 7 of Commission Regulation (EC) No 1749/96 
concerns the formula to be used for the calculation of such elementary aggregates. Practices 
varied considerably between Member States, and the achievement of consensus was difficult. 
The arguments centred on two issues. The first was whether the detailed indices should be 
calculated by taking the ratio of the average price of items in a particular stratum, or whether 
to take the average of the ratios of those items. The second was how to define "average" in the 
above calculation: the arithmetic mean or the geometric mean19. 
The Commission Regulation allows the use of the ratio of either arithmetic or geometric mean 
prices, but not the arithmetic mean of price relatives20. Member States which use formulae 
other than the ratio of arithmetic mean prices or the ratio of geometric mean prices should be 
in a position to demonstrate that the alternative(s) used meets the comparability requirement. 
Member States were not required to change the formula for the calculation of elementary 
aggregates for the indices before January 1997, although they were encouraged to do.so. 
The decision to rule out the use of the average of price relatives formula was not taken on the 
grounds that it is generally accepted as wrong but rather that it does not give results which are 
"comparable" to those given by other formulae. Nevertheless, the decision means that future 
research can concentrate on the merits of these other formulae. 
6.2.6. Minimum standards for sampling 
Statistical theory suggests that random sampling is desirable in order to avoid bias in a statistic. 
However, this is not easily achieved when it comes to the collection of prices for a CPI and 
most Member States follow sampling procedures which are referred to as "purposive" or 
"representative". The decisions on which prices to collect may thus be determined by the 
degree of co-operation of retailers or by the inclinations of particular price collectors. While 
this may not seem to be good practice it is not easy to demonstrate that the resultant indices 
are non-comparable on this account. 
Studies commissioned by the Commission (Eurostat) into these matters indicated that different 
sampling techniques provide considerable scope for non-comparability. They suggested that 
representative versus probability sampling could give large differences for item groups, but 
these were not significant on average. Furthermore, the studies indicated that the number of 
19 
2o See also paragraph 8.2. 
The United States' Bureau of Labor Statistics (BLS) is also investigating this following the Boskin report 
Details are given in paragraph 12.6. 
page 111 
elementary aggregates could have short term effects on comparability. In contrast, differences 
in the regional coverage of CPIs did not seem to lead to non-comparability, since the 
differences between the regional indices and the overall index seem to be entirely random. 
From the studies it was clear that a rule which changes current practices towards improved 
comparability was needed. 
The aim of Article 8 of Commission Regulation (EC)*No 1749/96 is to improve, where 
necessary, the reliability and comparability of HICPs by reducing errors that arise from 
different sample designs and practices. It requires that Member States should check their 
samples of prices as to their adequacy for the HICP and adjust sampling procedures as they 
judge necessary. Member States should not simply assume that their target sample is adequate 
but are required to provide some evidence . 
The extensive use of purposive sampling means that there is no adequate theoretical frame by 
which to judge the reliability (representativity and precision) of HICPs. Only a few Member 
States make any attempt to compute sampling errors for their CPIs and none has any measure 
of bias. Such errors would also be an aid to more efficient sample design. Studies are being 
carried out to assess both sampling error and bias in HICPs and these will be used later to set 
appropriate limits on such errors. It is necessary to establish what combination of the numbers 
and specifications of elementary aggregates and the number of prices required within each 
elementary aggregate will provide a HICP of sufficient reliability. 
6.2.7. Transmission and dissemination of sub-indices of the HICP 
The HICP Council Regulation requires a specification of the sub-indices to be produced and 
published along with the HICPs. Whilst the assessment of price stability under the convergence 
criterion primarily concerns the "all items" HICPs, the analysis of sources of inflationary 
pressure requires a sub-division of the HICP into component parts relating to different product 
groups. Commission Regulation (EC) No 2214/96 defines a set of sub-indices of the HICP 
with common coverage that the Member States are required to transmit to the Commission 
(Eurostat). The sub-indices are based on the classification COICOP/HICP22. This was a major 
step forward for many users as the components of national CPIs do not conform to a common 
classification. 
Each month Member States transmit the primary index series, i.e. the HICP and its sub-indices, 
to the Commission (Eurostat) correct to one decimal place, for example 99.5 or 102.4 taking 
1996 = 100. In order to avoid excessive and conflicting rounding errors, all derived statistics 
are calculated from these primary series. All derived statistics are published correct to one 
decimal place. Annual average index numbers are the sum of the twelve monthly figures (with 
one decimal place) divided by twelve and rounded to one decimal place. The 12-month change 
in this annual average is, however, based on the unrounded averages i.e. obtained directly from 
the primary series. Member States also transmitted the initial sub-index weights used and will 
report any subsequent changes to the Commission (Eurostat). Weights for the sub-indices are 
sent to Eurostat to a degree of detail of at least 1 in 1000. The weights of the sub-indices of 
the EICP and the MUICP are disseminated to a degree of detail of at least 1 in a 1000. Since 
Details about the target samples are given in paragraph 12.8.2. 
See also paragraph 6.2.1. 
page 18/^ 
March 1997 the Commission (Eurostat) has been disseminating every month all sub-indices 
and their weights . 
6.2.8. Common reference periods 
There are three types of base period used in the construction of CPIs: the period from which 
the expenditures for weights are obtained ("weight reference period"24); the period in which 
base prices are valued ("price reference period"); and the period in which the index base is set 
to 100 ("index reference period"). There are differences between national CPIs in all these 
reference periods. 
For the HICP, the Council Regulation sets the index reference period as 1996 = 100. Since the 
HICPs are derived from national CPIs it was necessary to "re-reference" or "price-update" the 
HICP and its sub-indices to 1996; that is to express the movements in the HICP and its sub-
indices by reference to the average level of prices in 1996, and subsequently to December 
1996, December 1997, December 1998, etc. Re-referencing is simply a scaling exercise which 
in itself has no effect on the measured rate of inflation. However, it allows HICPs to be treated 
and presented in the same way, provides for the construction of indices for groups of Member 
States or the EU as a whole, and allows for country weights changing each year. The problem 
of aggregating CPIs with different references and re-weighting frequencies brought out the 
computational advantages of the Laspeyres formula25. 
6.3. The EICP and the MUICP 
The European Index of Consumer Prices (EICP) is calculated as a weighted average of the 
HICPs of the 15 EU Member States. The index is computed as an annual chain index allowing 
for country weights changing each year. The weight of a Member State is its proportion of 
final consumption expenditure of households in the EU total. The values of final consumption 
expenditure in national currencies are converted into purchasing power standards (PPS) using 
the purchasing power parities of final consumption. The country weights used in 1997 are 
national accounts data for 1995 at 1996 prices. The European Economic Area Index of 
Consumer Prices (EEAICP) is calculated in the same way, with the inclusion of Iceland and 
Norway26. 
The task of aggregating Member States' HICPs to a European HICP is an exercise of 
measuring and aggregating the evolution of the inner values of all EU currencies in order 
obtain a corresponding measure of EU inflation. The final consumption expenditure in 
monetary transactions is the appropriate weight as it is commensurate with the coverage of the 
HICPs. It is right for Member States to be represented by their volume of consumption valued 
at standard prices relative to other Member States rather than by values which depend on 
financial and other factors. According to current Eurostat practice national weights for CPIs 
and HICPs are converted using purchasing power parities (PPPs). Their use reduces the 
disturbing volatility of exchange rates and enables an additive and meaningful expression of 
each Member State's relative importance in terms of final consumption expenditure, e.g. two 
countries with the same volume of consumption are given equal weights. 
:J Details are given in paragraph 6.4. 
Details are given in paragraph 12.3.2. 
See also paragraph 6.2.5. 
Liechtenstein is not included in the EEAICP since it neither calculates a national CPI nor a HICP 
page 19J 
For the participating countries of the Monetary Union the national currencies will be replaced 
by the Euro. It remains to be decided how to calculate the Monetary Union index of consumer 
prices (MUICP), and in particular how to derive each Member States' relative weight in the 
MUICP, when the final household consumption expenditure of the participating countries will 
be expressed in Euros. 
6.4. HICP data disseminated by the Commission (Eurostat) 
The HICPs are the result of three years' co-operation between the Commission (Eurostat) and 
the National Statistical Institutes on harmonizing the different methods and practices used to 
compile price indices. The first set of HICPs was published on 7 March 1997. Since then the 
Commission (Eurostat) publishes each month: 
• the all-items HICPs for all EU Member States plus Iceland and Norway27, 
• the European Index of Consumer Prices (EICP), 
• the European Economic Area index (EEA), 
• about 100 sub-indices, their corresponding weights and weighted averages (EICP and 
EEA), and 
• the country weights. 
For the HICPs and their sub-indices the following information is made available: 
• the monthly index level, 
• the monthly rate of change, 
• the annual rate of change, 
• the annual average index, and 
• the annual average rate of change. 
The information is updated monthly and available to all users from the Eurostat database 
"NEWCRONOS". The information can be obtained through Eurostat's Data Shop network. 
The launch of the first set of HICPs on 7 March 1997 was well received in the media, arid their 
monthly publication thereafter is working to the satisfaction of users. As a result of the 
complexity of the operation of compiling HICPs, Finland discovered a mistake in their HICP 
calculation just after the launch of the first set of indices. This mistake was corrected and the 
Finnish HICP series was revised with the publication of the February indices on 7 April 1997. 
The German and Austrian HICP series were also corrected for mistakes; revised figures for 
both Member States were disseminated with the publication of the August HICPs on 7 
October 1997. 
In line with Article 5 (1) (b) of the HICP Council Regulation, the HICP starts with the index 
for January 1997. The common index reference period is the year 1996. The rates of change 
for 1997 are established on the basis of the indices for 1996. The HICP concepts thus apply 
starting with the index for January 1996. 
21 Liechtenstein and Switzerland do not calculate HICPs 
page 2040 
Although the indices for 1995 cannot be considered as a legal requirement, all Member States 
agreed to provide them28. The 1995 indices for the United Kingdom are the interim indices for 
1995 adjusted for the geometric mean effect29. The indices for 1995 and the rates of change for 
1996 based on 1995 do not fulfil the HICP standards, but they are considered to be superior to 
national CPIs and the interim indices30 as regards comparability. They are, therefore, 
considered as the harmonized measure of inflation for the months in 1996 and are published by 
the Commission (Eurostat). 
Ireland estimated monthly HICPs and monthly sub-indices for 1995 and 1996 based on their 
quarterly data. The monthly figures are adjusted linear interpolations of the quarterly indices 
making allowances for several sales effects. The estimation of these sales effects is based on 
seasonal patterns identified from United Kingdom data. 
To calculate the rates of inflation for 1995 the Commission (Eurostat) would imputes indices 
for the months of 1994 based on the rates of change for the interim indices in 1995. These 
estimates are available only for the all items index. 
Table 1: 
Overview of HICP data available since 7 October 1997 
Monthly indices HICP 
Sub-indices 1995 
all Member States 
not F and UK 1996 
all Member States 
all Member States 1997 
all Member States 
all Member States 
Monthly rates of change HICP 
Sub-indices [1995/1994]31 
all Member States 
None 1996/1995 
all Member States 
not F and UK 1997/1996 
all Member States 
all Member States 
7. DEROGATIONS FROM THE PROVISIONS OF THE HICP COUNCIL 
REGULATION 
Article 5 of the FIICP Council Regulation allows the Commission (Eurostat), after consulting 
the EMI, to grant, where necessacy, derogations up to one year from the timetable established 
through the Council Regulation. "Necessary" means that a Member State has to make 
significant adjustments to its statistical system in order to fulfil its obligations. 
Only few Member States sought a derogation32. In most cases the issues concerned minor 
adjustments where satisfactory solutions could be found in accordance with the agreed 
implementation time table. Eventually, the Commission (Eurostat) has granted only one 
derogation to Denmark for firstly applying the elementary aggregates formulae in September 
1997. Retrospective series are to be provided. 
28 
29 
30 
31 
32 France and the United Kingdom do not provide sub-indices for 1995 
Explanations are given in paragraphs 6.2.5. and 12.6. 
The interim indices are available from January'1994 to December 1996 for all EU Member States. 
Iceland, Nonvay, and Switzerland 
Interim indices, see also paragraph 6.1. 
Denmark, Germany, France, Italy 
pagc2lfli 
8. FURTHER STEPS TOWARDS HARMONIZATION 
Although the HICPs provide the best current statistical basis for international comparisons of 
consumer price inflation, and very considerable progress has been made in harmonizing 
methodologies, more work remains to be done to achieve even better comparability. HICPs are 
not and will never be "fully" harmonized consumer price indices, inasmuch as the aim is 
comparability and not full harmonization. The Treaty on European Union expressly allows for 
national differences, which will continue to exist but at a level where the requirement of 
comparability of the HICP is not breached. Technical regulations and agreements will shortly 
be proposed in the following areas: 
8.1. Extended coverage 
Article 3 of Commission Regulation (EC) No 1749/96 defines the initial coverage33 of the 
HICPs from January 1997. Some difficult categories such as health and educational services, 
where there are major institutional differences between Member States, are at present not fully 
covered by the HICP. Since many goods and services in the area of health, housing, and 
education are heavily subsidised by the state, it is not always clear which prices should be 
included in an index of consumer prices, and the ways of treating this problem differ between 
Member States. 
A draft Commission Regulation amends Commission Regulation (EC) 1749/96 with regard to 
coverage and defines a staged procedure on how to extend the coverage of the HICP. The 
concept "household final monetary consumption expenditure" in the draft regulation defines 
both the goods and services to be covered and the prices to be used, which should be taken net 
of reimbursements, subsidies, and discounts. The draft regulation follows the definitions laid 
down in the new European System of Accounts (ES A 1995) where they are appropriate for 
international comparisons of inflation, and defines the details by reference to COICOP/HICP34. 
The draft regulation provides that the coverage of goods and services shall be completed in 
two stages, in December 1998 and December 1999 as follows: 
(a) Rents: By December 1998 the treatment of subsidised rents will be harmonized. 
(b) Services connected with the dwelling: By December 1998 the coverage of refuse 
collection, sewerage services and water supply, unless they are financed out of general 
taxation, will be extended. 
(c) Financial services: By December 1999 the HICP will cover the remaining financial 
services, e.g. charges for tax consultancy or investment advice. 
(d) Education: By December 1998 the HICP will cover all educational goods and services 
in a harmonized way. Education will be covered on a net basis, i.e. the weights and the 
prices will refer to the amounts actually paid by consumers net of reimbursements by 
government. This applies to school books and other materials, school meals, and to 
educational services provided by all types of schools and universities. To solve some of 
the methodological details, including the treatment of income dependent prices, a special 
Task Force has been set up by Eurostat. 
(e) Health: By December 1998 the HICP will cover all health goods and services (apart 
from hospital services) in a harmonized way. Health will be covered on a net basis, i.e. 
the weights and the prices will refer to the amounts actually paid by consumers net of 
See also paragraph 6.2.1. 
See paragraphs 6.2.1 and 6.2.7. 
page 224 
reimbursements by social security. The Task Force will look at the methodological 
details of implementation. The methodology for the inclusion of hospital services will be 
settled no later than December 1998. The category will be included as soon as possible 
thereafter. 
(f) Insurance: By December 1998 the HICP will cover all insurances connected with the 
dwelling, not only contents insurance. By December 1999 at the latest the HICP will also 
cover private health, civil liability, and travel insurance. The methodology will be settled 
by another special Task Force set up by Eurostat. If the Task Force finds an early 
solution, the implementation could be scheduled for an earlier date. 
(g) Social protection services: By December 1998 the HICP will cover the services 
provided by crèches, nurseries, play-schools and kindergartens in a harmonized way. 
They will be covered on a net basis, i.e. the weight and the prices refer to the amount 
actually paid by the consumer net of reimbursements by government. Other social 
protection services, especially retirement homes, give rise to similar implementation 
problems as hospital services. However, since those services are of growing importance 
they should be covered by the HICP. The methodology for the inclusion of, for example, 
retirement homes will be settled no later than December 1998. The category will be 
included as soon as possible thereafter. 
(h) Exclusions: The following will be excluded from HICP coverage: narcotics, imputed 
rentals of owner occupiers, other imputed rentals, games of chance, certain personal care 
services, life insurance and financial intermediation services indirectly measured. 
Where technically feasible, retrospective series will be compiled. It is estimated that the 
combined weight of the above goods and services is about 6% of "household final monetary 
consumption expenditure"35. 
There also remains the question of how to measure the impact of inflation on owner occupiers 
in respect of housing36. The actual prices faced by owner-occupiers for minor repairs of the 
dwelling and regular maintenance services are already covered in the HICP. Imputed rents or 
mortgage interest payments, which are used in some CPIs, are not actual price transactions and 
considered inappropriate for international comparisons of consumer price inflation. The 
question has been discussed extensively by Member States. Eurostat submitted to the SPC on 
13 March 1997 a position paper asking its view on whether to exclude such a non-comparable 
item from the HICPs or to include it on the basis of net acquisition prices for new owner-
occupied dwellings. Many Member States were sympathetic to the idea that the prices faced by 
owner occupiers when acquiring housing should be covered by the HICP, but felt that it was 
premature to proceed with an index of net acquisition of new dwellings. It was agreed that 
discussions on this issue should continue and that further research work should be carried out 
before a final decision could be taken. A special Task Force will be set up in 1998 by Eurostat. 
Extension of coverage beyond the obvious core of goods and services required agreement on 
the definition of inflation. The scope, or coverage in principle, was taken as "household final 
monetary consumption expenditure". Some commentators have suggested that the indices are 
seriously deficient on account of the incomplete coverage (in practice) assuming, by reference 
to some CPIs, this to be large and therefore important. The Commission (Eurostat) has pointed 
3:> See also paragraph 12.2.3. 
36 See also paragraph 10.2. 
page 2 
out that CPIs are an inappropriate reference and the significance of omissions depends on their 
relative price movement rather their size which, being net of reimbursements, will be small37. 
8.2. Minimum standards for the quality of HICP weights 
Article 8 (3) of HICP Council Regulation No 2494/95 requires that HICP weights are 
sufficiently up-to-date to ensure comparability whilst avoiding the cost of having Household 
Budget Surveys more frequently than every five years. Article 5 (3) further requires that 
implementing measures for maintaining the "reliability and relevance" of the HICPs be adopted. 
CPIs are fairly insensitive to changes in weights. Imposing the cost of high precision for all 
weights by frequent and comprehensive up-dating would not be desirable. Nevertheless, it is 
necessary to give some assurance that large differences in the frequencies of up-dating do not 
lead to non-comparability. 
A draft Commission Regulation sets minimum standards for the quality of HICP weights. The 
weights used can in general relate to a weight reference period up to seven years prior to the 
current year. However, adjustments need to be made for significant changes in expenditure 
patterns in the intervening periods. The draft regulation thus gives a minimum guarantee of the 
quality of weights used to construct the HICP and minimises any disparity between HICPs 
arising from different up-date frequencies38. 
The precise method of reviewing the weights is left to Member States to decide and to justify. 
The Commission (Eurostat) has suggested that it is possible to develop quality control 
procedures which focus on those relatively few weights which will be critical for the 
comparability, relevance and reliability of the HICP. A report of the review of the weights 
should be made available to the Commission (Eurostat). As a minimum this should show that, 
where changes in the prices of specific goods and services have diverged from the movement of 
the all items HICP, procedures have been instituted for monitoring the weights of such items in 
order to ensure that they are appropriate. 
The Commission (Eurostat) has for a number of years been working with Member States to 
harmonize the design, content and frequency of Family Budget Surveys. This work has 
potential importance for the harmonization of CPIs since the quality and up-to-dateness of 
weights depend on such data sources as well as other sources such as National Accounts data. 
8.3. Geographic and population coverage 
National CPIs differ in their choice of population coverage, e.g. some exclude persons living in 
institutions, others include them. A particular problem concerns the expenditure of residents 
whilst in a foreign country, and the expenditure of foreign visitors in the home country, and at 
the same time distinguishing between business and private expenditure. Article 3 of Council 
Regulation (EC) No 2494/95 restricts the HICPs to "goods and services available for purchase 
in the economic territory of the Member State", but this does not say anything about the 
residency status of the consumer. This question is associated with what Member States use as 
a primary source of HICP weights, i.e. National Accounts or a Household Budget Survey. 
People living in institutional households and foreign visitors are not normally covered in 
37 Details are given in paragraph 12.2.3. 
3K See paragraphs 12.3. and 12.4. for more details 
page 244 
Household Budget Surveys. They are included in principle in the National Accounts, but the 
accurate derivation of corresponding HICP weights may be difficult. 
The HICPs launched in March 1997 cover all households, regardless of income, resident in any 
part of the economic territory (rural and urban). Hence, some Member States needed to adjust 
their HICP weights to reflect households not covered by their national CPI, for example 
Greece, Portugal and the United Kingdom. However, the treatment of the expenditure of non­
residents, visitors on business trips and institutional households for the HICP is the same as 
that for the national CPI39. 
A draft Commission Regulation provides a harmonized definition of the geographic and 
population coverage of the HICP. It specifies that the coverage, for the calculation of the 
HICP weights, should include all "household final monetary consumption expenditure"40 which 
takes place on the economic territory of that Member State41. In particular, the coverage 
should include expenditure by foreign visitors and exclude the expenditure by residents whilst 
in a foreign country, i.e. the HICP should follow the "domestic concept". The coverage should 
refer to the expenditure of all private households irrespective of the area in which they live, and 
also to individuals living in institutions. Coverage should be households independent of the 
household income level. Expenditure incurred for business purposes should be excluded. 
8.4. Comprehensive Definition of HICPs 
In order to provide a complete and formal overview of HICP construction, the Commission 
(Eurostat) will revise and extend the implementation agreement approved by the SPC in 
January 1997. The document will tackle a number of issues concerning the construction of 
HICPs especially those areas for which legislation was considered premature or inappropriate. 
Examples are discounts, data editing, timing of data collection and seasonal adjustment. In 
order to speed up the completion of the methodological frame for the HICPs, "guidelines" will 
be formulated so as to cover the variety of existing concepts, methods or practices which are 
considered to give comparable results. The aim is to provide a complete description of the 
essentials of the HICP in 1998. 
So far a legislative framework has been produced for those aspects of HICP construction 
which have the greatest potential for introducing non-comparability in results. Hence, essential 
parts of the indices have been defined, but several other aspects of HICP construction have 
been left open which can affect the resultant indices. Differences in these are not, on the 
evidence available at this time, expected to lead to significant non-comparability. This lack of 
full definition has the advantage of allowing Member States to follow the variety of practices 
adopted for their CPIs but the disadvantages that the practices followed are not documented 
and not known either to other Member States, to Eurostat or to users. Further they may be 
changed without reference to any authority outside the National Statistical Institute. In order 
to complete the framework within which the HICPs are defined and legitimised it is necessary 
to have a description of what is currently done by Member States. The aim is not to evaluate 
but to give a detailed description of current practices. 
39 
411 
41 Except for Austria, where the national CPI refers to the expenditure by residents on the domestic 
territory, whereas the HICP also includes the expenditure by foreign visitors ("domestic concept") 
See also paragraph 8.1. 
The combined weight of these extensions is given in paragraph 12.2.3. 
page 251 
9. ENLARGEMENT OF THE EU 
The decision has yet to be taken concerning the applications for membership42 of the European 
Union, having regard to the candidates' ability to take on the obligations of membership, 
including adherence to the aims of political, economic and monetary union. The statistical 
information, which is relevant for the purposes of membership, is supplied by Eurostat. 
During the pre-accession stage the Candidate Countries are required to implement the "acquis 
communautaire"43, which comprises the implementation of Harmonized Indices of Consumer 
Prices (HICPs). In 1996 the first meeting was held with the Candidate Countries in order to 
involve them as fully as possible in the harmonization project. At the end of 1996 Eurostat sent 
out a questionnaire to all Candidate Countries on the legislative framework establishing HICPs 
in the Member States. The aim was to identify gaps and shortcomings in complying with the 
HICP requirements, needs for technical assistance, available resources, potential costs, as well 
as the timetable for the implementation of HICPs. The information will serve as a basis for 
discussion for future meetings and for establishing a detailed programme of work. 
First evaluations of the questionnaire focused on the Candidate Countries' ability to provide an 
index covering all goods and services as required under Article 3 of Commission Regulation 
(EC) No 1749/96 defining the initial coverage of the HICP44. The following table summarises 
the result: 
43 The candidate countries are: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, 
Poland, Romania, Slovak Republic, and Slovenia 
The legal framework that applies to the Member States of the European Union 
See also paragraph 6.2.1. 
page 261 
Table 2: 
Assessment of compliance with HICP requirements in the Candidate Countries: 
Initial coverage 
Candidate Countries' timetable for implementing the Eurostat's judgement of compliance 
requirements of initial coverage of the HICP: with respect to initial coverage: 
BUL currently not possible 
CYP from Jan-1998: compilation of HICPs; likely in 1998 
(data available in spring 1998) 
CZE 1998: re-classification according to COICOP/HICP; likely in 2000 
1999: revision of CPI basket; 
from beginning of 2000: compilation of HICPs 
EST from 1998: allocation of representative items for those HICP possible in 2000 
sub-indices which are not yet covered by the national CPI 
HUN 1997: implementation of fixed basket concept; possible in 2000 
1997 -1998: implementation of COICOP/HICP 
LTU 2 years are needed to implement the HICP requirements currently not possible 
LVA possible in 2000 
POL 1997: implementation of COICOP in the Household Budget likely in 1999 
Survey; 
Jan-1998: implementation of COICOP/HICP and develop­
ment of software for the computation of the HICP; 
Mar-1998: implementing COICOP-based weighting system; 
from 1999: compilation of HICPs 
ROM not before 1998 no plans to revise national CPI before 
; : 2000 . 
SVK currently not possible 
SVN Dec-1998: coverage of all goods and services as defined by likely in 1999 
the initial coverage regulation and implementation of 
COICOP/HICP; 
[from 1999: compilation of HICPs and all sub-indices | 
10. THE HICP - A COMPARABLE MEASURE OF CONSUMER PRICE INFLATION 
10.1. Improved comparability 
The HICPs are based on harmonized concepts, methods and practices which make them better 
suited for comparing inflation between Member States than the national CPIs. As a result of 
the harmonization project also some national CPIs improved in various aspects in quality for 
measuring inflation. 
Within the frame of the HICP Council Regulation, the Commission (Eurostat) has set in place 
a series of specific measures in the form of Commission Regulations introducing a common 
classification (COICOP/HICP), a common HICP coverage, and a series of minimum standards 
such as45: 
• Incorporating newly significant goods and services (e.g. mobile phones); 
• Making -appropriate allowance for quality change in the things consumers buy (quality 
adjustment); 
• Ensuring that samples of prices are properly representative; 
45 More details are given in paragraphs 6.2. and 12. 
page 27i 
• Using comparable formulae for measuring price changes. 
The Boskin report and the BLS46 response to it, gives support to the achievements of the 
harmonization process. The issues raised by Boskin were those on which the harmonization 
had already focused; most notably quality adjustment, the basic formula and keeping up with 
market developments (new goods and weights). 
Removing the different approaches to owner occupiers, health and education for the first phase 
of HICPs was a major step towards more comparable indices. The approach of minimum 
standards had a considerable immediate effect on comparability through banning inappropriate 
practices and removing to a good extent the biases resulting from them, such as new goods, 
quality, missing prices and aggregation bias as well as formula, substitution and outlet bias. 
Reducing further remaining biases and errors is considered as a medium term task that started 
with the first sets of compiled HICP data. However, the HICPs will always be subject to a 
certain margin of statistical error and unknown biases. 
If it were possible to quantify the bias in a CPI, there would be no bias because the CPI would 
be corrected accordingly. Until alternative unbiased measures can be defined and constructed 
the size of any bias is a matter of speculation. There is wide agreement that the main source of 
bias in CPIs arises from the treatment of quality changes, but the amount of bias is unknown. 
National CPIs can, however, be used to investigate alternative approaches to the problem of 
constructing price indices. 
The rules and minimum standards laid down in the regulations and guidelines not only assure 
the comparability, precision and reliability of HICPs but they result in quality improvements in 
measuring inflation. National CPIs also benefit to the extent that they may adopt these 
minimum standards. For example Ireland has produced since January 1997 a monthly CPI 
instead of the quarterly CPI produced previously. Luxembourg is the first Member State that 
has replaced its national CPI with the HICP, and Greece has launched a new national CPI that 
is mainly based on the HICP standards. 
With the proposed link to the new European System of Accounts (ESA 1995) through the 
introduction of the concept of "household final monetary consumption expenditure"47, the 
HICPs provide a clear and unambiguous concept for defining coverage and constructing 
weights and also improve the compatibility with National Accounts. 
10.2. Comparability and coverage 
The comparability of the HICPs is the result of the implementation of a number of measures 
explained in detail in paragraph 6.2., however, the focus of this section is the coverage of the 
HICP. Following the launch of the HICP, the Commission (Eurostat) and statisticians in the 
Member States have been criticised for not having been able to extend the coverage of the 
HICPs with regard to owner-occupied housing, education and health48. 
The actual prices faced by owner-occupiers for minor repairs and the regular maintenance of 
the dwelling are already covered by the HICP. However, imputed rents or mortgage interest 
46 The Bureau of Labor Statistics is responsible for calculating the US CPI 
See also paragraph 8.1. 
See also paragraph 8.1. 
page 28flb 
payments, which are used in some CPIs to measure "inflation" faced by owner occupiers in 
respect of housing, are considered inappropriate for international comparisons of consumer 
price inflation since these are not actual monetary transactions. Imputed rents are the 
opportunity costs to owner occupiers of living in their houses rather than a reflection of actual 
prices faced by them as consumers. These and any other opportunity costs are not regarded as 
part of inflation. Mortgage interest is simply the cost of credit, and credit payments are not 
normally included in CPIs. The SPC discussed the treatment of owner occupied housing in the 
HICP on 13 March 1997. Many Member States were sympathetic to the idea that the prices 
faced by owner occupiers when acquiring housing should be covered by the HICP, but felt that 
it was premature to proceed with an index of net acquisition of new dwellings. It was agreed 
that discussions on this issue should continue and that further research work should be carried 
out before a final decision could be taken. A special Task Force will be set up in T 998 by 
Eurostat. 
The effect of excluding most parts of health and educational services from the HICP 
depends on how these services are eventually measured; in particular, the way in which 
reimbursements are dealt with. Not all health and educational services are covered in all CPIs. 
Where they are included not always allowances are made for the fact that consumers are often 
reimbursed. Some solutions have been found to the extend that almost complete coverage of 
health and education will be achieved in two stages, in December 1998 and December 1999. 
The inclusion of some items in after 1998 reflects either the fact that no Member State has 
technical solutions for their treatment (e.g. hospital services: what are the prices faced by 
consumers?) or that the methods and practices must be refined before comparability can be 
assured. 
Assuming that 6% of full coverage, as defined in terms of "household final monetary 
consumption expenditure", is missing, this matters only to the extent that inflation in the 
exclusions differs significantly from inflation in general. If, for example, the rate of inflation 
given by the HICP is 2.0%, inflation in the non covered items would have to be twice as high 
in order to change the measured rate to 2.1%. If the sub-index for the non-covered items 
evolves at a similar rate as the all-items index then it does not affect the rate of inflation 
measured by the HICP. Although non-coverage is a drawback of the HICP it needs to be 
evaluated in the context of the other major achievements of the harmonization process. 
10.3. Differences between CPIs and HICPs 
HICPs numerically diverge from national CPI as a result of differences in concepts, methods 
and practices. Since national CPIs and HICPs serve different purposes, it can be misleading to 
compare both indices directly49. The numerical differences can be positive or negative, 
however, it is not the intention of this réport to explain or comment on numerical differences, 
which was already done by the Commission in its Convergence Report of 199650.. The focus of 
this paper is the comparability of the HICPs and the Member States' compliance with the 
regulatory framework. The HICPs constitute the only comparable basis for assessing inflation 
convergence among Member States and inflation convergence will be assessed during the 
critical period before the start of Stage III of Economic and Monetary'Union, as required by 
the Treaty, on the basis of these comparable HICPs. Nevertheless, since Article 109 (j) TEU 
See also paragraph 4. 
"Report on convergence in the European Union in 1996" - COM(96)560 final, published in European 
Economy, supplement A, No 1 - January 1997 
page 29J 
allows for taking into account "other price indices", national CPIs may, among others, be taken 
into consideration. 
11. REACTIONS FROM USERS, MEDIA, AND MEMBER STATES 
11.1. Opinion of the European Monetary Institute fEMTï 
The EMI has stated the following: 
"As a key user and as forerunner of the European Central Bank (ECB), the EMI has been 
closely involved in the preparatory work for the HICPs through the consultation procedures 
laid down in Article 5.3 of the Council Regulation on HICPs and through the participation of 
EMI technical experts in Eurostat's Working Party. 
Against the background of the differing objectives, concepts and methods underlying the 
national CPIs, the EMI regards the harmonization efforts as essential for the assessment of 
convergence in accordance with the Treaty on European Union. HICPs will form the basis for 
the assessment of price stability convergence in the Convergence Report of the EMI in early 
1998. In the short and medium term the focus is therefore on the comparison of HICPs of 
individual Member States. However, from the start of Stage Three of Monetary Union, while 
retaining this role for Member States not participating in the single currency area, the HICPs 
will be a central indicator for the single monetary policy and this implies the use of the index 
for the Monetary Union area as a whole (MUICP). The measures which have been introduced 
for the purpose of assessing convergence will form a good statistical basis for the MUICP. At 
the same time, the use of the MUICP for monetary policy purposes may increase the 
importance of considerations such as the timeliness of data, since the data are likely to be an 
important ingredient in policy analysis each month. 
The harmonization so far achieved appears in general satisfactory. The common coverage and 
classification as well as the detailed publication of sub-indices is an important improvement for 
analytical purposes. A comparable basic formula has been established and first measures 
introduced to improve the comparability of methodological issues (approaches concerning 
quality adjustment and sampling). The EMI has supported the approach to establish minimum 
standards now and to introduce more comparable and reliable methods in the medium term. 
Many of the issues discussed concern the measurement of inflation and the reliability of 
consumer price statistics in general and work in this field is therefore particularly welcome 
from a monetary policy point of view. However, this positive assessment on the progress 
achieved does not imply that differences in methods have been completely eliminated. 
Moreover, the extension of coverage to those parts of consumers' expenditure which are not 
covered by the initial HICPs is a particular concern of the EMI. 
In sum, the EMI sees the plans for further development of the HICP as a necessary prerequisite 
for their use in monetary policy, without prejudicing their usefulness for the assessment of 
convergence." 
page 301 
11.2. Opinion of the Directorate General for Economic and Financial Affairs of the 
European Commission (DGID 
DGII has stated the following: 
"As a key user, DG H, the Directorate General for Economic and Financial Affairs, has 
persistently insisted on a timely availability of comparable and reliable data for the assessment 
of inflation convergence. DG II therefore welcomes that the timetable for the launch of the 
HICPs, as it is laid down in the Council Regulation (EC) No 2494/95 concerning harmonized 
indices of consumer prices, has been met. This has allowed the Commission to use the HICPs 
in its recent official documents, and more particularly in the Progress Report on the 
implementation of the 1996 Broad Economic Policy Guidelines and in the Commission's 
Recommendation for the 1997 Broad Guidelines of the Economic Policies of the Member 
States and the Community. The "operational" use of the HICPs one year before the 
preparation of the Convergence Report of 1998 is very important, as it leaves time to policy 
makers and economic agents to familiarise with this new index. 
The launch of the HICPs must also be considered as a major achievement, since quality has not 
been sacrificed to timeliness. The HICPs, in their current shape, show a high degree of 
comparability across Member States, not only in terms of coverage, but also in quality terms. 
National Statistical Institutes (NSIs) have agreed on minimum standards and on good practices 
regarding some key methodological aspects, like lower level formula or weight updating. The 
fact that the improvement in comparability and in quality have gone hand in hand is much 
appreciated by the users. 
However» DG II was thwarted in the execution of its tasks by the unavailability of historical 
series for some Member States' HICPs, in contradiction either with the legal requirements 
induced by the relevant Regulations or with the agreement with Eurostat. Although these 
problems have been solved since then, DG II wants to express its hopes that similar 
deficiencies will not occur again on the occasion of the release of amended HICP series (for 
instance when the coverage will be extended). Likewise, some HICP series have been subject 
to significant revisions in the months following the launch of the HICPs. Although DG II is 
well aware that some revisions are unavoidable, NSIs should ensure to do what is necessary to 
minimise the magnitude of potential revisions. 
Regarding future progress, DG II encourages the work initiated by the Working Party in order 
to extend the coverage of the HICPs and to improve the statistical accuracy of both the CPIs 
and the HICPs. Finally, DG II reiterates its attachment to a continued respect of the timeliness 
of the HICPs, as the latter is crucial for users' efficient monitoring of the inflation in the 
forthcoming EMU, and in the European Union as a whole. " 
11.3. Summary opinion of Member States 
The launch of the HICP was successful in all Member States. The main users, i.e. the Central 
Banks, ministries of finance, ministries of economics, financial institutions and research 
institutes, have shown great interest in the HICP. Since, in most Member States the main users 
have been kept fully informed about the progress of the harmonization project and its 
achievements, it was not difficult to explain to them the differences in methodology and 
concept between the national CPI and the HICP. In addition, some Member States held 
seminars on the HICP for their main users. 
page 3 U 
In contrast, the interest of the general public in this new measure of inflation was moderate. 
However, Member States consider that the situation might change in 1998 when the decision 
will be taken on the participating countries of the Economic and Monetary Union. 
Some Member States have chosen to keep the HICP and the national CPI as similar as possible 
by implementing methodological improvements of the HICP also in the CPI, and by 
introducing goods and services which were added for the compilation of the HICP also in the 
CPI. Other Member States try to keep the HICP and the national CPI as distinct as possible to 
emphasise that they serve different purposes. 
Luxembourg was the first country which replaced the national CPI by the HICP. The use of 
the HICP as a measure of inflation was never questioned. However, there were long 
discussions on whether the HICP should be used as the national CPI, and therefore for wage 
indexation. 
In all other Member States there have so far been no particular difficulties in introducing an 
additional price index, since it was stressed that the HICP was primarily for international 
comparisons of inflation, and that the national CPI remained the best indicator for national 
purposes. In Greece, Ireland, Italy and Austria the launch of the HICP coincided with the 
launch of the updated national CPI. Ireland successfully moved from a quarterly to a monthly 
cycle for compiling the national CPI. Greece reported that the publication of the HICP 
strengthened confidence in the revised national CPI. However, there were discussions in 
Greece as to whether the HICPs instead of the CPIs should be used as deflators for many 
economic and monetary variables, which might lead to revised figures concerning various 
international comparisons. 
12. COMPLIANCE AND QUALITY CONTROL 
Article 12 of the HICP Council Regulation establishes indirectly an obligation to monitor 
compliance, by empowering the Commission (Eurostat) to request information from Member 
States that is necessary to evaluate: 
(a) the compliance with comparability requirements and 
(b) the quality of the HICPs. 
Furthermore, all specific measures laid down in Commission Regulation require Member States 
to provide information sufficient to monitor and control quality. The general approach in the 
Commission Regulations is to specify the outputs, leaving it to Member States to decide how 
to achieve them51. This approach implies the need for an effective compliance monitoring 
system, in order to assure that Member States are in practice fulfilling the letter and the spirit 
of the various regulations and guidelines. The Commission may, however, require more 
information than Member States would require themselves in order to ensure that the indices 
are reliable. 
The following paragraphs 12.1 to 12.8. of this report summarise the results of a first round of 
compliance monitoring, whilst discussions are proceeding on how best to provide a system of 
independent statistical checks so as to assure a high quality of the HICPs, and to set in place a 
monitoring system in line with the practice existing in many Member States. The Commission 
(Eurostat) is also considering whether further mechanisms are required to ensure the quality 
See also paragraph 5. 
page 32! 
and integrity of this important new economic indicator, one option being to establish an 
independent advisory body. 
The compilation of HICPs is to a large extent based on the national CPIs. For those aspects of 
the index construction which have the greatest potential for introducing non-comparability the 
HICPs are based on harmonized concepts, methods and practices, which make the HICPs the 
best measures for comparing inflation between Member States. The aim of this section is to 
assess the improvements in comparability that have been delivered with the introduction of the 
HICPs. Paragraphs 12.2. to 12.8. describe the improvements as required by the existing 
legislative framework of the HICP, whereas paragraph 12.1. outlines improvements beyond the 
minimum required by the regulations. 
12.1. Specific changes made by Member States 
The harmonization project and the compilation of the HICP required considerable resources in 
terms of personnel and computing equipment52. Several Member States increased the number 
of professional and other staff, and/or enhanced their computer system to compile the HICP 
from January 1995, as for example Ireland, Luxembourg, Sweden and the United Kingdom. 
Austria introduced in the price collecting offices at the beginning of 1997 special software for 
the data collection and transmission. 
In order to provide time series of HICPs which are as comparable as possible, Member States 
calculated retrospective data for the HICP. All Member States provided monthly HICPs 
starting with the index for January 1995, and all but France and the United Kingdom compiled 
the HICP sub-indices from January 199553 using the classification COICOP/HICP54. However, 
Ireland and the United Kingdom provided the retrospective data only from the publication of 
the August figures on 7 October 1997. The provision of retrospective data required, in some 
Member States, the estimation of historic prices and weights for a number of items which were 
not covered by the national CPI. Furthermore, Greece, Luxembourg, Austria, Finland, and the 
United Kingdom introduced the geometric mean formula for the calculation of elementary 
aggregates for the indices prior to January 199755. Several Member States introduced or 
planned to introduce the COICOP classification for their national CPI which will be welcomed 
by many users as the components of national CPI do not conform to a common classification. 
Greece, Austria, Portugal, and the United Kingdom adjusted their geographic and population 
coverage in time for the launch of the HICP, thereby partly anticipating a draft Commission 
Regulation providing a harmonized definition of the geographic and population coverage of the 
HICP . Since Greece includes rural areas, Portugal covers the Azores and Madeira, and the 
United Kingdom covers the top 4% of earners and also pensioners mainly dependent on state 
benefits, the HICPs launched in March 1997 refer to all households, regardless of income, 
resident in any part of the economic territory (rural and urban). Austria moved to the 
"domestic concept" for the HICP by including the expenditure by foreign visitors in Austria. 
52 See also paragraph 2. 
53 See also Table to 6.4. 
See also paragraphs 6.2.1. and 6.2.7. 
55 See also paragraph 12.6. 
See also paragraph 8.3. 
page 331 
Several Member States took account of new goods and services such as mobile phones when 
constructing their HICP. Belgium, Denmark, Italy, Luxembourg, and Austria introduced new 
weights, earlier than previously planned, in time for the launch of the HICP. The Netherlands 
decided to move over to an annual updating of the weights used for compiling their HICP and 
the national CPI starting from December 1997. The inclusion of new goods and services and 
the use of more up-to-date weighting information should produce more reliable and relevant 
indices57. 
In Germany where the data collection and quality control is managed to a large extent by the 
regional offices (Statistische Landesâmter), a system has been introduced which allows the 
Federal Statistical Office (Statistisches Bundesamt) to receive microdata from the regional 
offices in order to compile the statistical information required by Eurostat to demonstrate the 
quality of thé HICP under compliance monitoring. 
12.2. Coverage 
12.2.1. Interim indices launched 29 February 1996 
During 1996 the Commission (Eurostat) published each month the interim indices. They were 
used by the Commission (DGII) and the European Monetary Institute in their first convergence 
reports to the Council in 1996. Interim indices are available for the time period January 1994 
to December 1996 for all EEA countries and Switzerland. 'As required by the Council 
Regulation they were replaced58 by the HICPs starting with the index for January 1997. 
The interim indices59 provided a better basis of comparison of consumer price inflation than the 
national CPIs because they were adjusted to make the coverage of goods and services as 
similar as possible. Certain categories of expenditure were excluded, others which are not 
covered by some national CPIs were included for all Member States. The combined weight of 
these inclusions and exclusions was about 16% of total consumer spending. The exact amounts 
varied from country to country, details for the EU Member States are given in Tables 4 and 5 
below. Apart from those differences in the coverage of goods and services, the interim indices 
were constructed by exactly the same methods as used by the national CPIs from which they 
were derived. 
Table 3 highlights the difference in the coverage of goods and services between the interim 
indices and the national CPIs. The table is taken from Eurostat's press release No 15/96 of 29 
February 1996 for the launch of the interim indices, corrected regarding the estimates for the 
United Kingdom. It indicates that the interim indices covered about 84% of the goods and 
services included in the national CPIs, with a maximum of 92% identity in coverage in Greece 
and a minimum of 75% in the Netherlands. The main differences in item coverage results from 
the treatment of owner occupiers in respect of housing60. The variance in the weights for health 
and education, which accounts for 11% of the French CPI and less than 1% in the United 
Kingdom's, reflects not only major institutional differences between countries in the ways in 
57 
58 
59 
60 Details are given in paragraphs 12.3. and 12.5. 
With the exception of Switzerland which produced an interim index but does not compile a HICP 
See paragraph 6.1. 
See also paragraphs 8.1. and 10.2. 
page 34i 
which consumers pay for such services, but also differences in the ways these items are treated 
in the CPI. 
Table 3: 
Expenditure excluded from national CPIs when computing the interim indices 
- approximate weights per 1000 (January 1996 61) -
Interim Index 
+ Owner occupied housing 
+ Health and Education 
+/- Others 
= national CPI B 
822 
40 
56 
82 
1000 DK 
821 
126 
36 
17 
1000 D 
826 
92 
45 
37 
1000 EL 
916 
-
76 
8 
1000 E 
913 
17 
44 
26 
1000 F 
875 
-
112 
13 
1000 IRL 
846 
40 
43 
71 
1000 I 
900 
-
78 
22 
1000 L 
883 
-
85 
32 
1000 
Interim Index 
+ Owner occupied housing 
+ Health and Education 
+/- Others 
= national CPI NL 
749 
118 
12 
121 
1000 A 
871 
9 
46 
74 
1000 P 
876 
61 
39 
24 
1000 FIN 
774 
100 
41 
85 
1000 S 
793 
160 
25 
22 
1000 UK 
796 
120 
9 
75 
1000 IS 
750 
108 
43 
99 
1000 N 
803 
115 
31 
51 
1000 
The following Tables 4 and 5, which are also taken from Eurostat's press release No 15/96 of 
29 February 1996, give details of the categories which have been excluded from national CPIs 
and these where additions have been made. They include only information for the EU Member 
States. 
Table 4: 
Categories which have been added to national CPIs when computing the interim indices 
Alcoholic beverages 
Tobacco 
Services for the routine 
maintenance and repair of 
dwellings B DK D EL 
in E F IRL I 
in L 
in 
in NL A P FIN S ll'KJ 
1 
1 
i 
i 
The reference expenditure is the total expenditure covered by the national CPI of each Member State 
which is set as a weight of 1000. The weights given for the interim index and the included or excluded 
categories are those used for the compilation of the index in January 1996 
page35i 
Table 5: 
Categories which have been excluded from national CPIs when computing the interim indices 
Imputed rents of owner 
occupiers 
Mortgage interest payments 
Refuse disposal and sanita­
tion services (payment as tax 
regardless of consumption) 
Insurance in respect of the 
dwelling 
Water supply (payment as tax 
regardless of consumption) 
Health 
Package holidays 
and expenditure abroad 
Travel insurance 
Taxes related to die use of a 
car, road taxes and tolls 
Car insurance 
Drivers licence fee 
Education 
Social services 
Financial services n.e.c. 
Other services n.e.c. B 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out DK 
out 
out 
out 
out 
out D 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out EL 
out 
out 
out 
out 
out 
out E 
out 
out 
out 
out 
out 
out 
out 
out F 
out 
out 
out 
out 
out IRL 
out 
out 
out 
out 
out 
out 
out 
out 
out I 
out 
out 
out 
out 
out L 
out 
out 
out 
out 
out 
out 
oat NL 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out A 
out 
out 
out 
out 
out 
out 
out 
out 
out p 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out FIN 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out S 
out 
out 
out 
out 
out 
out 
out 
out 
out UK 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
out 
12.2.2. HICPs launched 7 March 1997 
As required by the Council Regulation, on 7 March 1997 the Commission (Eurostat) launched 
the first set of HICPs for all EU Member States, Iceland and Norway62. They replaced the 
interim indices as the best measure for comparing consumer price inflation between Member 
States, and are used in the convergence reports of the EMI and the Commission to the 
Council. The HICP is a new and different index for measuring inflation and not just an 
"extended interim index". In contrast to the interim indices, which were entirely based on the 
national CPIs and only adjusted to make the coverage of goods and services as comparable as 
possible, the HICPs are also (and in particular) harmonized with respect to certain 
methodological aspects of the index construction. 
The additions to coverage as compared with the interim indices include in particular insurances 
for cars and dwellings, package holidays, banking services, several administrative fees and 
charges, educational goods and services such as evening classes, and health goods which are 
obtainable without prescription63. The combined weight of these additions accounts for about 
5% of total consumer spending on average across Member States, with a minimum of about 
2% in Portugal and a maximum of about 7% in Iceland. Details are given in Table 6. It shows 
consumers' expenditure on the main categories of goods and services which were introduced 
("added to the interim indices") for the construction of the HICPs, and thus reflects the weight 
of these sub-indices in each Member State's HICP. 
See paragraph 6.2.; details about the available data are given in paragraph 6.4. 
See also paragraph 6.2.1. 
page 36l 
Table 6: 
Sub-indices introduced for the compilation of the HICPs 
- approximate weights per 1000 (Annual 1996 M) -
Health products - paid by the 
consumer and not reimbursed 
Package holidays 
Education - commonly paid by 
consumers in Member States 
Insurance 
Banking services n.e.c. 
Other services n.e.c. 
Sum of additions: B 
8,7 
31,4 
• 
8,7 
3,5 
11,0 
63,3 DK 
7,4 
12,6 
3,3 
3,5 
20,4 
13,7 
60,9 D 
8,5 
16,7 
4,6 
5,7 
2,0 
5,3 
42,8 EL 
11,9 
2,6 
13,7 
11,6 
• • 
18,1 
57,9 E 
8,4 
7,8 
1,2 
4,0 
o,i 
8,1 
29,6 F 
4,8 
1,4 
3,7 
11,7 
7,0 
10,5 
39,1 IRL 
6,0 
30,6 
6,0 
2,5 
1,1 
3,4 
49,6 I 
16,0 
0,0 
8,6 
1,8 
3,2 
9,5 
39,1 L 
2,8 
50,0 
3,4 
5,5 
0,3 
7,0 
69,0 
Health products - paid by the 
consumer and not reimbursed 
Package holidays 
Education - commonly paid by 
consumers in Member States 
Insurance 
Banking services n.e.c. 
Other services n.e.c. 
Sum of additions: NL 
7,6 
16,4 
3,0 
9,8 
0,3 
9,0 
46,1 A 
4,1 
16,8 
3,9 
7,0 
2,1 
1,0 
34,9 P 
5,6 
3,2 
0,8 
5,3 
0,2 
0,3 
15,4 FIN 
11,2 
22,0 
1,3 
3,7 
0,9 
2,2 
41,3 S 
12,1 
9,5 
1,7 
7,3 
1,5 
3,1 
35,2 UK 
7,0 
30,0 
n,o 
6,0 
2,0 
5,0 
61,0 IS 
9,2 
24,5 
0,0 
6,6 
13,8 
16,4 
70,5 N 
7,1 
20,2 
1,8 
5,3 
• • 
• • 
34,4 
12.2.3. HICP versus CPI coverage 
The aim of the HICP is to measure inflation faced by consumers. The concept "household final 
monetary consumption expenditure" defines both the goods and services to be covered by the 
HICP and the price concept to be used: prices net of reimbursements, subsidies, and discounts. 
The concept is laid down in a draft Commission Regulation amending Commission Regulation 
(EC) 1749/96 with regard to coverage65. 
"Household final monetary consumption expenditure" refers only to monetary transactions and, 
therefore, neither includes income in kind, as for example agricultural products grown for own 
consumption, nor services of owner occupied dwellings. In particular, the expenditure faced by 
owner occupiers when acquiring housing expressed as imputed rents or mortgage interest 
payments are not regarded as part of the inflationary process and hence excluded from the 
HICPs. Consideration is being given to the inclusion of the net acquisition prices of new 
dwellings. However, until a satisfactory solution for the services of owner occupied dwellings 
64 
65 The reference expenditure is the total expenditure covered by the HICP which is set as a weight of 1000. 
The HICPs for the Member States are derived from the national CPIs using different weight, price and 
index reference periods and different frequencies of updating weights. In order to make the weights 
comparable between Member States and for the aggregation to the EICP they were re-referenced to 1996 
(average level of prices for the year) 
See paragraph 8.1. 
page 31a 
can be found, such expenditure is by definition excluded from "household final monetary 
consumption expenditure". 
Table 7 gives rough estimates for what is already covered by the HICP as of January 1997, 
what remains to be added in 1998 and 1999, and what is out of the scope of the HICP and 
hence not considered as relevant for internationally comparable measures of inflation, though 
covered by some national CPIs. The HICPs of the Member States currently cover more than 
90% of "household final monetary consumption expenditure". The remaining 10% will be 
added by December 1999, at the latest. 
About 6% refer to goods and services which are not yet covered by the HICP because either 
no Member State has technical solutions for their treatment or the methods and practices must 
be refined before comparability can be assured. Complete item coverage (as far as it is 
possible) will be achieved in two stages, in December 1998 and December 1999. The main 
extensions of coverage concern health, education, social protection services such as retirement 
homes, and insurances66. 
Up to about 4% would be added to the coverage of some of the HICPs because of adjustments 
to the geographic and population coverage, which is defined in a draft Commission 
Regulation amending Commission Regulation (EC) 1749/96 with regard to the geographic and 
population coverage67. The HICP refers to "household final monetary consumption 
expenditure" which takes place on the economic territory of a Member State. In particular, all 
Member States, except for Denmark and Italy who already include such expenditure, need to 
cover the expenditure df persons living in institutions. Belgium, Greece, Spain, Ireland, 
Luxembourg, the Netherlands, Portugal, Finland, the United Kingdom, Iceland, and Norway 
need to include the expenditure by foreign visitors and exclude expenditure of residents whilst 
in a foreign country. Other Member States are already using this "domestic concept". The 
additional weight of about 20% for Luxembourg reflects the importance of cross-border 
shopping. The negative weight for Norway indicates that residents spend more abroad than 
foreign visitors in Norway. Belgium and Spain cannot at present provide estimates for the 
additions to population coverage. * 
The two final rows in Table 7 illustrate the difference between "household final monetary 
consumption expenditure" and the national CPIs. The weights differ widely between Member 
States; some explanations are given in the footnotes. The figures are rough estimates which 
may change if Member States decide to take account of the additions to the HICP also in their 
national CPI. No single CPI or set of CPIs should be taken as a model for what HICPs should 
cover. 
Note: HFMCE = Household final monetary consumption expenditure; 
for Luxembourg the HICP and CPI are identical. 
66 Details are given in paragraph 8:1. 
67 See paragraph 8.3. 
page 38J 
Table 7: HFMCE covered by the HICP compared to national CPI coverage 
- approximate weights per 1000 (Annual 1996a) 
HICP initial coverage as of Jan-97 
Additions to items coverage in 
Dec-98 and Dec-99 
Additions to population coverage 
by latest Dec-98 
HICP final coverage as of Dec-99 
• = HFMCE 
Expenditure covered by: 
a) HFMCE but excluded from CPI 
b) CPI but excluded from HFMCE B 
952 
48 
no esti­
mate 
1000 
0 
lld DK 
903 
31 
66 
1000 
82 b 
114e D 
953 
45 
2 
1000 
2 
114* EL 
875 
56 
69 
1000 
69 
0 E 
954 
46 
no esti­
mate 
1000 
0 
5 F 
847 
153 
0 
1000 
87 e 
0 IRL 
1000 I 
973 
27 
0 
1000 
0 
48 8 L 
725 
80 
195 
1000 
— 
— 
HICP initial coverage as of Jan-97 
Additions to items coverage in 
Dec-98 and Dec-99 
Additions to population coverage 
by latest Dec-98 
HICP final coverage as of Dec-99 
= HFMCE 
Expenditure covered by: ^ 
a) HFMCE but excluded from CPI 
b) CPI but excluded from HFMCE NL 
886 
70 
44 
1000 
84 
173 k A 
960 
40 
0 
1000 
132h 
83 * P 
943 
49 
8 
1000 
0 
77 m FIN 
930 
40 
30 
1000 
0 
0 S 
896 
96 
8 
1000 
0 
165° UK 
917 
83 
1000 
124* 
96° IS 
908 
42 
50 
1000 
0 
92 p N 
937 
68 
-5 
1000 
25J 
100 q 
The reference expenditure is household final monetary consumption expenditure which should be 
covered by the HICP from December 1999. This is set as a weight of 1000. The weights are rough 
estimates which refer to the average price level of the year 1996 
Package holidays, fees for driving licence, arms permission, hunting licence and passport 
Domestic services, legal services, insurance, used cars, administrative fees 
Car tax and tax to put a vehicle into traffic for the first time ("BIV/TMC") 
Imputed rents 
Imputed rents, car tax 
Health provided by social security, games of chance 
Expenditure by foreign visitors in Austria 
The HICP covers the whole population while the CPI excludes the top 4% of earners and pensioners 
mainly dependent on state benefits 
Financial services 
Imputed rents, taxes for local services 
Games of chance, car tax 
Imputed rents 
Mortgage interest and other items in owner-occupied housing, games of chance 
Mortgage interest, depreciation, taxes for local services, games of chance 
Imputed rents and games of chance 
Imputed rents, health, education and insurance on a gross basis 
page 391 
12.3. Weighting 
12.3.1. Quality of weights 
No specific measures relating to weights were required of Member States for the launch of the 
HICP. However, Belgium, Denmark, Italy, Luxembourg, and Austria have updated their 
weights earlier than planned in time for the launch of the HICP, thus anticipating requirements 
for minimum standards for reliability and relevance as laid down in a draft Commission 
Regulation concerning minimum standards for the quality of HICP weights . 
Denmark introduced new weights in October 1996. They are used for the calculation of the 
HICP and the national CPI, and were used for the computation of the interim indices. The new 
weights are based on National Accounts figures and the Household Budget Survey of 1994. 
In January 1997, new weighting schemes were introduced by Belgium based on the Household 
Budget Survey of 1995-1996, by Ireland based on the Household Budget Survey of 1994-
1995, by Italy based on National Accounts data for 1995, and by Luxembourg based on the 
Household Budget Survey of 1993. Austria's consumption pattern is based on the Household 
Budget Survey and National Accounts data for 1993/94 and adjusted with the help of the 
preliminary accounts for 1995. 
12.3.2. Weight reference period 
Given that the HICPs are derived from national CPIs they have different weight reference 
periods and different frequencies of updating weights. The weight reference period is the time 
period of expenditure or consumption to which the weights used for compiling the HICPs refer 
for the months of 1997. It ranges from 1989/1990 to 1995/1996 depending on the Member 
State. 
The majority of Member States update weights every five years. From 1998 they will be 
required to adjust weight every year, if there are any significant changes in expenditure 
pattern . The Netherlands decided to move to an annual base year revision for the HICP and 
the national CPI starting from December 1997. Hence, together with France, Sweden, and the 
United Kingdom, the Netherlands will compute a chain index with annual weight updating. 
Denmark and Luxembourg are also considering to annually update their weights, however not 
before December 1998. 
Table 8 gives an overview of the weight reference periods and update frequencies used for the 
compilation of the HICP in 1997: 
'" Sec also paragraph 8.2. 
(,° For more details see paragraph 12.4. 
page 40i 
Table 8: 
B 
DK 
D 
EL 
E 
F 
IRL 
I 
L 
NL 
A 
P 
FIN 
S 
UK 
IS 
N HICP weight reference periods and update frequencies in 
Weight Reference 
Period of the HICPs 
in 1997: 
1995 - 1996 
1994 
1991 
1994 
1990- 1991 
1995 
1994 
1995 
1993 
1990 
1993/1994 - 1995 
1989- 1990 
1990 
1996 
Jul-1995-Jun-1996 
1995 
1993 - 1995 Planned next 
weight reference 
period: 
1995 
1998 - 1999 
1996 
1999 
1995 
1995 
1994- 1995 
1995 
1997 
Jul-1996-Jun-1997 
2000 
1994- 1996 To be introduced in 
/ starting with the 
index for: 
Dec-1998/Jan-1999 
Dec-2000/Jan-2001 
Dec-1997/Jan-1998 
Dec-1998/Jan-1999 
Dec-1997/Jan-1998 
Dec-1997/Jan-1998 
Dec-1997/Jan-1998 
Dec-1997/Jan-1998 
Jan-1998/Feb-1998 
Dec-2001/Jan-2002 
Dec-1997/Jan-1998 1997 
Annual updating 
("chain index"): 
X 
[xfromDec-1997] 
X 
X 
X 
When presenting the HICP Eurostat "re-references" or "price-updates" the weights of all 
Member States to 1996 (average of the year), and subsequently to December 1996, December 
1997, December 1998, etc.70. Hence, the movements in the HICP and its sub-indices is 
expressed by reference to the average level of prices in 1996, and subsequently to December 
1996, December 1997, December 1998, etc. This price updating is a re-scaling exercise which 
does not change the weight reference year and does not effect the measured rate of inflation. 
12.4. Sub-index weights 
Each month Member States transmit the HICP and its sub-indices to the Commission 
(Eurostat). The sub-indices are based on the classification COICOP/HICP71. They are needed 
to analyse the sources of inflationary pressure and are, hence, published monthly by Eurostat 
alongside the HICP. 
Member States also transmit the sub-index weights used in the computation of the HICP to the 
Commission (Eurostat) to a degree of detail of at least 1 in 1000. The weights assigned to each 
category of COICOP/HICP vary from country to country depending on the relative importance 
of consumers' expenditure on each good or service in each Member State. There is no 
"uniform basket" applying to all Member States. 
Sec also paragraph 6.2.8. 
Sec paragraphs 6.2.1. and 6.2.7. 
page 4 U 
Table 15 in the annex to this document is an extract of Eurostat's database "NEWCRONOS"72 
giving the weights for all sub-indices from all Member States. The weights refer to the year 
1996, i.e. the weights dating from the weight reference period of each Member State were 
"price-updated"73 and expressed by reference to the average level of prices in 1996. 
The weights shown for the sub-indices in the Table 15 differ widely between Member States, 
reflecting differences in the relative importance of consumers' expenditure on each group of 
goods and services. However, the weights also reflect differences between Member States in 
the weight reference period and the frequency of updating the weights. A weight for a certain 
item reflects the consumption of that item in the weight reference period which may differ by 
up to five years. For most items, such as food or housing, five year old weights might be good 
estimates reflecting current consumers' expenditure. However, for certain items which are 
significantly losing or gaining in importance, such as data processing equipment, five year old 
weights might not correctly capture their relative importance. The weights for example for data 
processing equipment (COICOP/HICP 09.1.3.) would probably not differ so widely between 
Member States (from 0.2%o to 6.4%o) if the increased demand for PCs had been taken into 
account. Additionally, since the prices for data processing equipment are decreasing, the 
expenditure weights expressed by reference to the average price level of 1996 are lower than in 
the weight reference period. 
From 1998 Member States will be required to review their weights every year and to adjust 
them for significant changes in the expenditure pattern, if the draft Commission Regulation 
concerning minimum standards for the quality of HICP weights is adopted74. This will remove 
most of the non-comparability between HICPs which arises purely from methodological 
differences in weighting, i.e. the difference between annual and less frequent base year 
revision75. 
As part of the compliance monitoring the Commission (Eurostat) has asked several Member 
States to verify and if necessary correct their weights for some sub-indices which seemed to be 
either very low or very high as compared to other Member States' data. The analysis of the 
differences in the weighting pattern of Member States also indicated that the treatment of 
certain goods and services in the HICP, as for example package holidays (COICOP/HICP 
09.4.), might be an issue for future harmonization. 
12.5. Newly significant goods and services 
From January 1997 Member States are required to make provision to identify goods an J 
services which become a significant part of consumption and are not yet covered by the HICP 
The threshold is defined as a sales volume of over one part per thousand of total consumers' 
expenditure in the Member State. The Commission (Eurostat) will facilitate the process by 
exchanging information about "newly significant goods and services" introduced in other 
Member States' HICPs. The aim is firstly to maintain the relevance of the HICP by taking 
account of market developments, and secondly to keep the HICPs broadly in step with respect 
to up-to-dateness in order to ensure comparability76. However, it is not easy to define which 
2 See also paragraph 6.4. 
73 For explanation see paragraphs 6.2.8. and 12.3.2*. 
See paragraph 8.2. 
75 Details arc given in paragraph 12.3.2. 
70 See also paragraph 6.2.2. 
page 42,1 
good or service is newly significant, which is a new variant of an already existing item, or 
which item was included in the HICP to improve representativity. 
Table 9 lists newly significant items which were included in the HICP of at least one Member 
State for the first time in 1997 and reported to the Commission (Eurostat): 
Table 9: 
Newly significant goods and services since January 1997 
Pay-TV Throwaway camera 
Subscription to the Internet Rear window brake lights 
Mobile phones and charges Bicycle saddle 
Fax-phone (answering machine or service 
connection with a phone line) in Artificial sweetener 
Modem Ecological products (milk, butter, flour) 
Printer Ice cream cakes and bars 
Home computer Special milk, e.g. vitamin enriched 
CD-ROM educational games/ games Low fat "cream" (15%) 
Computer games Margarine with lower cholesterol 
Unformatted PC-diskette Light wine (4.6% alcohol) 
Concentrated washing powder Lemonade with alcohol (< 5% alcohol) 
Satellite antenna Kiwi fruit 
12.6. Elementary aggregate formula 
For the calculation of the elementary aggregates in the HICP Member States are allowed to 
use of the ratio of either arithmetic or geometric mean prices, but not the arithmetic mean of 
price relatives77. Eight countries were required to change their formula: Denmark, Greece, 
France, Italy, Luxembourg, Austria, Finland, and the United Kingdom. All except Italy 
introduced the geometric mean; Italy changed to the ratio of arithmetic mean prices. Denmark 
has a derogation up to September 1997 on the grounds that it requires a "significant 
adjustment to its statistical system"78, but will then introduce the geometric mean 
retrospectively starting with the index for January 1997. All countries except for Austria and 
the United Kingdom introduced the change in formula also for their national CPIs. 
In order to improve comparability Greece, Luxembourg, and Austria applied the geometric 
mean formula retrospectively starting with the index for January 1995; Italy, Finland, and the 
United Kingdom used the new formula from January 1996. 
France has chosen a stepwise procedure for moving to the geometric mean for heterogeneous 
products, which account for about one third of all elementary aggregates included in their 
HICP. Half the changes were carried out by January 1997, hence about 18% of.the HICP is 
currently calculated using the geometric mean. The remaining changes to the geometric mean 
will be carried out in January 1998 and January 1999. Sweden is using the ratio of standardised 
mean prices which is a variant of the geometric mean. Both these Member States need to 
demonstrate by the end of 1997 that their formula leads to comparable results in the sense that 
See also paragraph 6.2.5. 
Article 5 (2) of Council Regulation (EC) No 2494/95 
page 4 
the effect on the HICP is less than one tenth of one percentage point on average'in 1997 
against 1996. 
For the calculation of the elementary aggregates in the HICP eight Member States are now 
using the geometric mean or a close variant, eight are using the ratio of arithmetic mean prices, 
and France a combination. However, Portugal will move to the geometric mean starting with 
the index for January 1998. 
Five Member States estimated the effect of the change in formula on the HICP as about 0.1 
percentage points over a period of 12 months. In the United Kingdom the introduction of the 
geometric mean reduced inflation by 0.5 percentage points on average. 
Table 10 gives an overview of the elementary aggregates formula used and the changes carried 
out in Member States: 
page 44] 
Table 10: 
Computation of elementary aggregates in the HICP 
B 
DK 
D 
EL 
E 
F 
IRL 
I 
L 
NL 
A 
P 
FIN 
S 
UK 
IS 
N For the 
computation of 
the HICP the 
formula for EA 
was changed: 
no 
yes, 
but derogation 
until Sep-1997 
no 
yes 
no 
yes, 
progressively for 
heterogeneous 
products 
no 
yes 
. yes 
no 
yes 
no 
yes 
no 
yes 
yes 
no Formula used in the 
HICP is the ratio of 
arithmetic mean prices 
(RAM) or geometric 
mean (GM): 
RAM 
GM 
- derogation 
RAM 
GM 
RAM 
RAM for homogenous 
products (1/3), 
GM for heterogeneous 
products (1/3), 
other formula for fresh 
products, complex 
prices and tariffs (1/3) 
RAM 
RAM 
GM 
RAM 
GM; 
RAM for certain items 
such as fruit, 
vegetables, and rents 
RAM 
GM 
variant of the GM 
(ratio of standardised 
mean prices) 
GM 
GM 
RAM New formula was 
introduced in the HICP 
staring with the index 
for: 
— 
Jan-1997 
- derogation 
— 
Jan-1995 
— 
Jan-1997: 
half of the changes to 
the GM were done; 
18% of the index is 
calculated using GM; 
Jan-1998, Jan-1999: 
further changes to GM 
— 
Jan-1996 
Jan-1995 
_ 
Jan-1995 
GM will be used from 
Jan-1998 
Jan-1996 
Jan-1996 79 
Mar-1997 
— Estimated effect on 
the HICP over a 
period of 12 
months in 
percentage points: 
— 
estimate not yet 
available 
- derogation 
— 
-0.1 
— 
-0.1 
— 
no estimate 
available 
no estimate 
available 
— 
-0.1 
— 
-0.1 
-0.5 
no estimate 
available 
— New formula 
was/will be 
introduced in the 
CPI: 
— 
yes, planned 
starting with index 
for early 1998 
— 
yes, starting with 
index for Jan-1994 
— 
yes 
—. 
yes, starting with 
index for Jan-1996 
HICP and national 
CPI are identical 
— 
no (average of 
relatives) 
yes, starting with 
index for Jan-1998 
yes, starting with 
index for Jan-1996 
no 
yes, starting with 
index for Mar-
1997 
... 
12.7. Quality adjustment 
Quality adjustment is widely accepted among experts as one of the most, if not the most, 
intractable problems in CPI construction. As the Boskin report illustrates, the problem is not 
generally understood and many observers share the mistaken impression that no allowances are 
made for improvements that have occurred in product quality thus leading to an overstatement 
79 Estimates for 1995 are adjusted to take into account the effect of the formula change, see also paragraph 
6.4. 
page 45i 
of inflation. In practice many different adjustments have been made as index compilers have 
attempted to solve the problems in different ways and these may have resulted in an over­
compensation for such improvements. 
As a first step of compliance monitoring and to initiate further research in order to define 
appropriate standards for the treatment of changes in the quality of goods and services in the 
HICP, the Commission (Eurostat) requires information on actual quality adjustments. For five 
goods Member States were asked to provide the number of observations which were replaced 
during the four months period January 1997 to April 1997, and also the type of quality 
adjustments which were made to introduce these replacements into the HICP. Men's shirts, 
sofas, CD players, refrigerators and washing powder were selected because these five items are 
covered in all HICPs, are fairly easy to define, and give a range of rates of product change: 
slow, medium and fast. The quality adjustments were classified as one of three types: 
(a) linking, which is equivalent to the assumption that the difference in price between the 
old item and its replacement is wholly attributable to a difference in quality. Therefore, 
no price change between the old item and its replacement is reflected in the HICP. 
Member States need to be able to demonstrate that linking is not used automatically, i.e. 
without justification80. One argument used is that the price difference represents the 
"market" evaluation of the quality difference as in "overlap pricing" (see (c) below). 
Another argument is that the items are indeed so different that they cannot be compared 
and that the replacement is introduced to maintain the representative of the sample. 
(b) same quality adjustment, which treats the replacement as being of same quality as the 
old item which it replaces. Therefore, the whole of the price difference between the old 
item and its replacement is reflected in the HICP. In the absence of an explicit national or 
Eurostat estimate of the value of the quality change, a same quality adjustment is the 
default adjustment under Article 5 of Commission Regulation (EC) No 2494/95. 
(c) other quality adjustment, where the value of the quality difference between the old 
item and its replacement is estimated as somewhere in between zero and the whole price 
difference, or occasionally outside that range. Those estimates could be made by 
commodity experts, or using methods such as hedonic regression81, overlap pricing82, 
option pricing83, the production cost approach84, or the imputation approach85. 
The results showed large differences between Member States in the proportion of observations 
that were replaced during the first four months of 1997. Some had low replacement rates of 
80 
82 
83 
85 See also paragraph 6.2.3. 
Coefficients of a regression model, which relates the price to a number of characteristics of the item, are 
taken as estimates of the value of the quality difference between the old item and its replacement 
The price difference between the old item and its replacement in the overlap period, which is considered 
as the "market" evaluation, is used as estimate of the value of the difference in quality between the two 
successive items 
The prices charged for features which are included in the replacement item but optional in the old item 
are used as estimates of the value of the quality difference between the old item and its replacement 
Additional manufacturai costs of producing the replacement item as compared to the old item is used as 
the estimated value of the difference in quality between the two successive items 
The price change between the old item and its replacement is imputed using the price change of the 
other items belonging to the same group. Hence, the value of the quality adjustment between the old 
itcniand its replacement is estimated as the difference between the price of the old item and the imputed 
price 
page 46flB 
between 6% and 12% for each of the five items, whereas others showed replacement rates of 
up to 41% for sofas and 54% for CD players. Some Member States reported that for some 
items they did not replace any observation from January to April 1997. 
As regards the type of quality adjustments it was only possible to look at their distribution 
for about ten Member States as the number of replacements in the remaining Member States 
was small, i.e. ten replaced observations or fewer per item during the four months period. For 
the ten Member States the results showed that the types of quality adjustments used differ 
between the five items and between Member States. The majority of Member States use the 
extreme adjustments "linking" and "same quality". Some use both procedures to about the 
same extent, whereas others almost exclusively use the "linking" procedure or assume the 
"same quality" for most replacements. Only a few Member States use "other quality 
adjustments" as the main procedure. 
The differences in procedure between Member States do not necessarily lead to non-
comparability but do confirm the widely expressed concern that "quality adjustment" is giving 
rise to considerable scope for bias and hence non-comparability. Not only are there large 
differences in the rates of product change identified but there is also little common in the 
procedural response that is evoked by a particular change. The procedures followed rest on 
different assumptions about what is to be measured and on varying amounts of information 
available from which to compute an adjustment. In a majority of cases the procedures followed 
involve no assessment of the differences in specification between a product and its 
replacement. 
The next step is to further analyse the adjustment procedures and to estimate the effect on the 
HICP. This requires the development of a common terminology for quality adjustment, 
including the distinction between a replacement item and a new good. For example, the 
omission of an observation for one or two months and the introduction of a new good 
thereafter makes a quite different assumption about a quality change from alternative 
procedures, and may implicitly yield non-comparable results. 
From the information collected it is not possible to estimate the effect that the different quality 
adjustment practices have on the HICP. Certain practices, for example linking, may raise or 
lower the index compared with a "same quality" adjustment depending on whether the price of 
the replacement is lower or higher than the price of the old item. The Commission (Eurostat) 
proposes to examine the effect on the index of a particular quality adjustment practice by 
comparing the HICP in each Member State with the index which would have resulted from a 
"standard reference practice". This standard reference practice would not necessarily be the 
correct or best practice as there is no consensus as to what the correct or best practice is. 
However, it serves as a point of reference against which to judge the practices of Member 
States. The Commission intends to follow a sequential inquiry approach making improvements. 
The burden on Member States is thus kept to a minimum. 
Furthermore, the interaction between the sampling procedure and quality adjustment needs to 
be investigated. How are replacements identified? Why do some Member States have high 
replacement rates where others do not report any replacements at all? Differences in the 
sampling and the quality adjustment procedure might have counterbalancing effects on the 
HICP. 
Finally, the Commission (Eurostat) will carry out further checks on compliance with respect to 
the use of linking. Member States need to be able to demonstrate that automatic linking is not 
page 47iV 
used. In the absence of national estimates for the value of the quality difference, the present 
position is that Member States should as a default reflect the full price difference between the 
old item and its replacement in the HICP. Eurostat's database on quality adjustments should be 
operational in 1998. 
To sum up, so far the comparability of HICPs has been improved by banning one frequently 
used but inappropriate procedure for treating changing product quality and further 
improvement is expected as a result of a co-ordinated programme of work among Member 
States. Work comparing practices and their underlying assumptions and by targeting the most 
important areas of product development is throwing much light on specific operational issues 
that must be resolved before comparable practices can be established. Agreements are 
necessary on what product changes should be regarded as changes in quality and on 
appropriate procedures for allowing for particular changes in order to provide a basis for 
extending the initial requirements. As the BLS response to Boskin indicated it is unlikely that 
all the problems of quality change in CPIs will ever be resolved. However, the comparability of 
HICPs can be improved if common approaches are followed in like situations. This will require 
agreement on concepts and procedures, the sharing of information on product specification and 
the valuation of particular changes. The Commission (Eurostat) and Member States are 
working actively to this end. 
12.8. Sample design and maintenance 
12.8.1. Sampling and comparability 
Good sample design and maintenance have been recognised from the outset of the 
harmonization exercise as critical to reliability, relevance, and comparability of HICPs86. 
However, for reasons of costs and operational constraints the sample of prices used in national 
CPIs and, hence, for HICPs do not follow methods advanced in statistical theory. As a result 
few Member States have any assessment of the precision of their indices (sampling errors) and 
none has any measure of bias. 
Most Member States follow some form of purposive sampling rather than random or 
probability sampling and the sizes of the samples depend more on costs and arbitrary historical 
decision processes than on the demands of a required level of accuracy. However, it does not 
follow that because a sample fails to meet the requirements of theory that it necessarily gives 
poor results. It is not therefore a matter of requiring all Member States to conform to a 
particular practice since the costs of change may not be warranted. Whether a HICP sample 
. gives acceptable results is an empirical question which can only be answered by carrying out 
appropriate research. The harmonization process and the co-operation it has evoked among 
Member States provides an opportunity to examine the problem in ways not available to a 
single National Statistical Institute. The effect of a particular sampling practice on one HICP 
can be explored by reference to other HICPs either by simulation or by other experimental 
methods. 
The Commission (Eurostat) has instituted a programme of research with Member States which 
aims to establish those sampling methods and practices which yield reliable results and to 
develop methods for assessing the reliability of HICPs whatever sampling arrangement are 
See also paragraph 6.2.6. 
page 48] 
used. As part of that programme, Statistics Netherlands has analysed the procedures for 
sampling geographic localities, outlets, items, and varieties87 used for compiling the HICP. 
Member States were asked to identify their sampling procedures as one of the following types: 
(a) Probability sampling: 
SI = simple random sampling 
PPS = sampling with probability proportional to size 
stratified SI = stratified sampling with SI sampling in each stratum 
stratified PPS = stratified sampling with PPS sampling in each stratum 
(b) Non-probability sampling: 
judgmental = sampling where the selection of elements is based on the judgement of 
experts 
cut-off = sampling where the elements with a value of the auxiliary variable, e.g. 
sales value, above the cut-off value are included in the sample 
quota = sampling where the number of elements is fixed a priori, and the 
selection of elements is delegated to price collectors 
Sampling methods vary considerably between Member States. Only Sweden and the United 
Kingdom seek to use full probability sampling, all other Member States mainly apply non-
probability procedures, such as judgmental or cut-off sampling. The main advantage of 
probability sampling is that it gives some guarantee against bias. It also allows the estimation of 
sampling errors and the optimisation of the sample sizes for localities, outlets, items, and 
varieties. Member States frequently use non-probability sampling due to the lack of sampling 
frames which are needed to apply probability sampling techniques. 
Most Member States use a two-stage sample design to select geographic localities and outlets: 
first a sample of municipalities is drawn, and then in each selected municipality a sample of 
outlets is chosen. Municipalities are in general sampled using probabilities proportional to the 
number of inhabitants. Outlets are selected according to their turnover, in general on a 
judgmental basis. Six Member States use probability sampling for the selection of outlets: the 
Netherlands, Portugal, Finland, Sweden, the United Kingdom, and Norway. Sweden does not 
first select localities and then outlets, but uses random stratified one-stage sampling to select 
outlets from the Swedish business register. Most Member States exclude mail order firms and 
market stalls from the selection of outlets. 
In all Member States, except for Sweden, the items are chosen by the National Statistical 
Institute using criteria such as representativity rather than probability sampling techniques In 
general the item selection is a two-stage procedure: first a number of item sub-groups are 
selected using the cut-off method allowing only those sub-groups with the largest market 
shares to be chosen; then specific items are selected from each sub-group by means of 
judgmental selection. In those cases where the National Statistical Institute indicates the items 
only by loose specification, the price collectors usually choose the most frequently bought 
variety that fits the item description. 
The results of Statistics Netherlands for sampling geographical localities and outlets are 
summarised in Table 11, those for sampling items and varieties in Table 12: 
A variety is a more detailed description of the particular item, i.e. good or service, selected in an outlet 
by the price collector within the item specification provided by the National Statistical Institute 
page 49J 
Table 11: 
Monthly sample of geographical localities and outlets in Member States 
Localities Outlets 
Design Number Frame Low or zero coverage Design Updating* Number 
B judgmental 65 yes mail order firms judgmental every base year 9 509 
revision 
DK judgmental 30 yes mail order firms, judgmental every third year 1900 
street markets 
J) cut-off, 190 no shops for luxury items judgmental every base year 22 100 
quota and for low quality revision 
items, weekly markets 
EL judgmental 23 yes shops for luxury items, judgmental every base year 3 200 
non-food street markets revision ' 
E cut-off 130 no unknown judgmental in reaction to 29 000 
market signals 
F stratified 96 no unknown judgmental yearly 27300 
PPS 
IRL stratified SI 82 no mail order firms, judgmental, every base year 3 898 
street markets quota revision 
I unknown 82 yes mail order firms, cut-off every base year 25 000 
teleshopping firms revision 
L judgmental 22 yes mail order firms, street judgmental in reaction to 634 
markets, small non- market signals 
specialist food shops 
NL stratified 100 yes mail order firms stratified SI, every base year 11000 
PPS judgmental, revision 
cut-off 
A cut-off 20 no temporarily open outlets, judgmental every base year 4 200 
i street markets revision 
P PPS -41 yes shops for luxury items, stratified PPS, instantly in 9 500 88 
street markets, con- judgmental reaction to 
sumption co-operatives. market signals 
FIN stratified 107 yes street markets, door-to- stratified PPS, every base year 2 000 
PPS door selling, network judgmental, revision 
marketing cut-off 
S no sampling of yes specialist shops, mail stratified PPS every year 20% 726 
localities < order firms, repair by rotation 
workshops 
UK stratified SI 146 yes non-food market stalls stratified PPS five yearly 18 000 
shops requiring a stratified SI 
membership fee 
IS judgmental 4 yes unknown judgmental every base year 420 
revision 
N stratified 100 yes shops requiring a stratified PPS every year 1/6 2 100 
I PPS membership fee by rotation 
* Except for (forced) replacement of outlets which cease trading or refuse to continue co-operation 
Source: Statistics Netherlands 
10 700 starting with the updating of the index in late 1997 
page 501 
Table 12: 
Monthly sample of items and varieties in Member States 
Design Items 
Updating* Number Varieties 
Design No of price 
quotations** 
B judgmental every base year revision 461 judgmental 91980 
DK judgmental in reaction to market signals 1200 judgmental 25 000 
D judgmental every base year revision 750 cut-off 400 000 
EL judgmental every base year revision 600 judgmental 20 000 
E cut-off, 
judgmental in reaction to market signals 471 judgmental 150 000 
judgmental, 
cut-off yearly 1033 quota 171 000 
IRL judgmental every base year revision 560 quota 45 000 
judgmental every base year revision 920 cut-off 300 000 
judgmental in reaction to market signals 263 5 700 
NL cut-off, 
judgmental in reaction to market signals 1200 cut-off 100 000 
judgmental, 
cut-off every base year revision 710 judgmental, 
cut-off, quota 80 000 
stratified PPS instantly in reaction to market 577 
signals 89 stratified PPS 40 000 
FIN judgmental every base year revision 401 judgmental 43 600 
stratified PPS, 
SI, judgmental in reaction to market signals 318 cut-off 22 800 
UK judgmental yearly 646 cut-off 120 000 
IS judgmental every base year revision 2 131 judgmental 13 738 
N judgmental yearly 900 judgmental 45 000 
* Except for (forced) replacement of items which cease to be sold 
** Excluding price quotations used in measuring housing items 
Source: Statistics Netherlands 
12.8.2. Statement of the target sample and maintenance 
As a first step of compliance monitoring and to initiate further research in order to extend the 
minimum standards for prices and for sampling Member States were asked to describe their 
"target sample" for the HICP90, which is essentially the present plan for the number of prices 
that should be obtained for the production of the HICPs from January 1997. The minimum 
standards for prices oblige Member States to maintain their target sample from month to 
month91, and the minimum standards for sampling require Member States to improve the 
representativity of their target samples, where necessary, in order to achieve reliability and 
comparability of HICPs92. 
Member States were asked to give the total number of items and the total number of price 
observations for each HICP sub-index on 3-digit level of COICOP/HICP, and were asked to 
89 
90 
91 
92 650 starting with the updating of the index in late 1997 
In line with Article 9 (f) of Commission Regulation (EC) No 1749/96 
See also paragraph 6.2.4. 
See also paragraph 6.2.6. 
page 5 Iv 
indicate the number of monthly and less frequent price observations. According to Article 8 of 
the HICP Council Regulation the required frequency of price collection for the HICP is at least 
once a month. The Commission (Eurostat) may allow less frequent price observation where the 
requirements of comparability of the HICP are not breached. 
For the HICP about 87% of the prices are collected at least monthly. In Greece, Italy, and 
Portugal certain items, such as fresh fruits and vegetables, are collected twice a month or even 
weekly. According to the target sample Belgium, Germany, Spain, and Iceland obtain close to 
100% of the prices monthly, Sweden and the United Kingdom 97%, France and Norway 95%, 
and Greece 94%. France extended the monthly price collection: in 1996 about 15700 
observations were changed for from quarterly to monthly price collection, and another 8700 
observations in 1997. Hence, an additional 16300 prices are now observed monthly for the 
HICP. Sweden also changed several items which were previously collected only once, twice, 
or four times a year to monthly price collection from January 1997. 
Less frequent than monthly price collection is the exception for the HICP, for example for 
seasonal items which are only available during certain months. However, the Netherlands and 
Portugal make frequent use of rolling or rotating samples where each month 1/x of the total 
prices for the item are obtained. Furthermore, the Netherlands collects prices for example for 
rents only once a year. Both Member States need to be able to demonstrate that this treatment 
does not give rise to non-comparability. 
Table 13 gives the percentage of monthly and less frequent price,observation as planned in the 
target samples of Member States: 
Table 13: 
Monthly and less frequent price observation for the HICP 
as specified in the target samples of Member States 
B 
DK 
D 
EL 
E 
F 
IRL 
I 
L 
NL 
A 
P 
FIN 
S 
UK 
IS 
N more than 
once a month 
0 
0 
0 
38 
0 
0 
0 
30 
0 
0 
0 
10 
0 
0 
0 
• 0 
0 F 
monthly 
100 
77 
100 
56 
100 
95 
87 
55 
91 
. 59 
72 
43 
84 
97 
97 
100 
95 'ercentage of p 
every second 
month 
0 
0 
0 
3 
0 
0 
0 
• 0 
0 
23 
0 
0 
11 
0 
0 
0 
0 rices observed: 
quarterly 
0 
1 
0 
2 
0 
•5 
11 
15 
0 
6 
28 
46 
3 
•3 
3 
0 
3 twice a year 
0 
20 
0 
0 
0 
0 
0 
0 
8 
0 
0 
0 
0 
0 
0 
0 
1 once a year 
0 
3 
0 
1 
0 
0 
2 
0 
2 
11 
0 
1 
1 
0 
0 
0 
1 
page 52J 
Most Member States have taken the introduction of the HICP as an opportunity to enhance 
their samples. For example, they have added items and increased the number of price 
observations to improve their sample for certain sub-indices. This required new surveys and the 
estimation of historic prices and weights. Greece added more than 200 and Austria 130 items 
to their target samples which, therefore, increased by 13% and 24% respectively. Most 
Member States also increased the number of price observations: Denmark and Greece observé 
6% more prices, Austria 14%, and Luxembourg 22% more than they did for their national 
CPI. Table 14 gives the number of items for which prices are collected and the number of 
prices observed in total per month, and the number of additions for the HICPs: 
Table 14: 
Total number of items and price observations per month for compiling 
the HICP as specified in the target samples of Member States 
B 
DK 
D 
EL 
E 
F 
IRL 
I 
L 
NL 
A 
P 
FIN 
S 
UK 
IS 
N Total nu 
items: 
461 
784 
1 766 
1 033 
601 
263 
16 239 
678 
593 
399 
309 
686 
2 131 
781 mber of 
observations: 
91 980 
31 158 
326 615 
33 687 93 
119 143 
171 088 
42 379 
288 553 
6 656 
115 522 
53 475 
103 691 
45 870 
29 899 
130 981 
13 738 
47 857 Additions fc 
items: 
0 
4 
208 
0 
1 
21 
0 
130 
11 
4 
3 
2 
0 
0 )r the HICP 
observations: 
0 
1696 
356 
1 803 
2 323 
0 
7 
1 190 
0 
6 605 
1 093 
170 
27 
73 
0 
0 
As a next step the Commission (Eurostat) will require under compliance monitoring 
information on the extent to which the target sample is actually maintained in Member States: 
how many of the prices which according to the target sample should be collected monthly (or 
less frequently in exceptional cases) are actually observed; what procedures are used for 
estimating missing observations. Sample maintenance is essential because the aim is to measure 
price changes rather than price levels per se. The sample must be designed to track prices of 
the same good or service from month to month from the reference period to reflect the change 
in a "fixed basket". Where prices cannot be observed short-term it is important that appropriate 
estimates are made; long-term it is important that appropriate replacements are found. So far 
the comparability of HICPs has been improved by banning the frequently used but 
inappropriate procedure of automatically carrying forward the last observed price. Further 
improvement is expected as a result of studies carried out by the Commission (Eurostat) in co-
Refers to a theoretical month during which all items are collected, i.e. all seasonal items and all items 
which are collected less frequently than monthly 
page 531 
operation with Member States on appropriate limits for the numbers of estimated prices and 
permissible estimation procedures. 
13. OPERATION OF THE PROCEDURE UNDER ARTICLE 14 OF COUNCIL 
REGULATION (EC) NO 2494/95 ("COMITOLOGY") 
According to Article 145 of the EC Treaty, "the Council shall (...) confer on the Commission, 
in the acts which the Council adopts, powers for the implementation of the rules which the 
Council lays down. The Council may impose certain requirements in respect of the exercise of 
these powers (...)". Such "requirements" have been generally defined by the Council in its 
Decision 87/373/EEC laying down the procedures for the exercise of implementing powers 
conferred on the Commission, and consist in the obligation for the Commission to consult a 
"committee" composed of representatives of the Member States, following a range of different 
possible procedures described in the said Council Decision. Each Council legal act must specify 
in every particular context which of these procedures is to be applied. The participation of 
"committees" determines that this implementation process is broadly known as "comitology". 
Concerning Harmonized Indices of Consumer Prices, Article 14 of Council Regulation (EC) 
No 2494/95 lays down the specific procedure according to which the Commission may 
exercise the powers for the implementation of the rules laid down therein. It states that the 
Commission shall be assisted to this end by the Statistical Programme Committee (SPC), 
established by Council Decision 89/382/EEC, Euratom, following the procedure Ilia 
(regulatory committee) among those established by Council Decision 87/373/EEC. 
In practice the comitology procedure to draw up Commission legal acts (Commission 
Regulations, so far) implementing Council Regulation (EC) No 2494/95 works as follows: 
(a) If Eurostat has evidence of non-comparability or sees a need for harmonization an initial 
proposal for a Commission Regulation is presented to and discussed by a Task Force, 
which is a sub-group of the Working Party comprising statisticians from the National 
Statistical Institutes, main users, experts working in the field of price indices, and a 
representative of the CEIES94. Taking into account the conclusions of the Task Force, 
Eurostat submits a draft regulation to the full Working Party. 
(b) The Working Party further discusses and proposes amendments to the draft regulation 
until a general agreement on the technical details can be reached. 
(c) Eurostat sends the draft regulation for interdepartmental consultation in the Commission. 
It needs to be approved by all relevant Commission Departments95 and the Legal Service. 
(d) Eurostat submits the draft regulation for opinion to the SPC which is acting as a 
Regulatory Committee type Ilia under the Qualified Majority Vote procedure. 
(e) In accordance with Article 5 (3) of the HICP Council Regulation, the Secretary General 
of the Commission sends the draft regulation for consultation to the EMI. -
(f) After all parties have been consulted and a final text is ready for decision, Eurostat sends 
the draft regulation for agreement of the Commissioner concerned. 
9A 
95 Committee on Statistical Information in the Economic and Social Sphere 
Secretariat General, DG II, DG V, DG DC, DG X, DG XV, DG XIX, DG XX, DG XXIII, and DG XXIV 
(g) After the Commissioner agrees the proposal the Secretary General of the Commission 
submits the draft regulation for approval by the Commission (the "college"), which 
decides finally on its adoption. 
(h) Once adopted, the Commission Regulation is published in the Official Journal. 
Thanks to the co-operation of the Member States, the support of the main users, especially DG 
II and the EMI, this procedure under Article 14 of the Council Regulation proved to be 
efficient and worked to the satisfaction of all parties involved. 
As a next step the Commission (Eurostat) intends to merge all implementing measures for the 
HICP which are currently laid down in several Commission Regulations and draft Commission 
Regulations into one consolidated Commission Regulation. Since the first regulations defined 
initial implementing measures and minimum standards, the progress in the harmonization 
program did and will require that new regulations amend previous ones, which makes their 
application rather convoluted. The consolidation will be aimed at simplifying the legislative 
framework and should take place after the main regulations have been adopted by the 
Commission. 
page 55Af 
ANNEX 
As mentioned in paragraph 12.4., the following Table 15 gives the weights for each sub-index 
of the HICP from each Member State. The weights dating from the weight reference period of 
each Member State were "price-updated" and expressed by reference to the average level of 
prices in 1996. 
The table distinguishes between actual and rounded zero weights. An actual zero weight is 
shown as ":" indicating that the according sub-index is not covered by the HICP of the 
Member State. A rounded zero weight is given as "0.0" indicating that the according sub-index 
is covered by the HICP of the Member State, but with a weight below 1 in 1000 which rounds 
to zero. 
For the following sub-indices Member States applied different definitions than those given in 
Commission Regulation (EC) No 2214/96, which is indicated in by a "d" in Table 15: 
• Denmark: 
04.5.5.: 
• Finland: 
04.1.: 
• Sweden: 
04.1.: 
04.5.5.: 
09.1.8.: The weight for "hot water, steam and ice" includes "solid fuels" for which the 
weight is below 1/1000. 
The weight for "actual rentals for housing" includes charges for heating, water, 
hot water supply and waste collection. The rent and the charges can be split 
neither in the index nor in the weight. 
The weight for "actual rentals for housing" includes charges for electricity, gas, 
water, hot water supply and waste collection. The rent and the charges can be 
split neither in the index nor in the weight. 
The weight for "hot water, steam and ice" includes district heating. 
The weight for "pets" refers only to pet food. 
For the following sub-indices Member States used special estimation procedures for deriving 
the weight; in Table 15 these weights are indicated by an "e": 
• Portugal: 
09.3.1. and 09.1.4.: The weights for "data processing equipment" and for "other major 
durables for recreation and culture" are estimates based on the household 
budget survey. 
12.4.2.A and 12.4.4.A: The gross weights for "insurance connected with the dwelling: 
contents" and "insurance connected with transport: cars" are derived from the 
household budget survey. Net weights are estimated using data from 
supervision authorities of insurances: premiums and claims for compensations 
related to maintenance and repairs. 
• Finland: 
02.1.1., 02.1.2. and 02.1.3.: The disaggregation of the weight for alcoholic beverage into 
"spirits", "wine", and "beer" is estimated using the consumption shares obtained 
from the Finish alcohol monopoly ALKO. They also deliver the index for 
alcoholic beverage, which is one index covering all prices for alcohol. 
page 56J 
04.1., 04.3.2., 04.4.A and 04.5.1.: The weights for "actual rentals for housing", "services 
for the regular maintenance of the dwelling", "other services relating to the 
dwelling", and "electricity" are estimated using the housing statistics of 
Statistics Finland. Since the household budget survey uses à different 
classification, the weights cannot be obtained from there. 
12.4.2.A and 12.4.4.A: The net weights for "insurance connected with the dwelling: 
contents" and "insurance connected with transport: cars" are estimated by 
deducting from the gross weights used in the national CPI thé value of 
reimbursements paid by insurance companies. 
Sweden: 
04.5.5.: The weight for "hot water, steam and ice" is estimated on the basis on energy 
statistics produced by Statistics Sweden. 
United Kingdom: 
07.1.1., 07.2.1. and 07.2.3.: The weights for "new and second hand motor cars", "spare 
parts and accessories", and "maintenance and repairs" equals the weight 
calculated from the household budget survey plus a proportion of the insurance 
weights representing claims paid directly by the insurance companies. 
09.1.1., 09.1.2., 09.1.3. and 12.2.: The weights for "equipment for the reception, recording 
and reproduction of sounds and pictures", "photographic and cinematographic 
equipment and optical instruments", "data processing equipment", and "personal 
effects n.e.c." equal the weight calculated from the household budget survey 
plus a proportion of the insurance weights representing claims paid directly by 
the insurance companies. 
page 571 
Table 15: Sub-index weights of the HICP as part per 1000 (Annual 1996) 
01. 
01.1. 
01.1.1. 
01.1.2. 
01.1.3. 
01.1.4. 
01.1.5. 
01.1.6. 
01.1.7. 
01.1.8. 
01.1.9. 
01.2. 
01.2.1. 
01.2.2. 
02. 
02.1. 
02.1.1. 
02.1.2. 
02.1.3. 
02.2. 
03. 
03.1. 
03.1.1. 
03.1.2. 
03.1.3. 
03.1.4. 
03.2. FOOD AND NON-ALCOHOLIC 
BEVERAGES 
Food 
Bread and cereals 
Meat 
Fish 
Milk, cheese and eggs 
Oils and fats 
Fruit 
Vegetables incl. potatoes and other tubers 
Sugar, jam, honey, chocolate, confectionery 
Food products n.e.c. 
Non-alcoholic beverages 
Coffee, tea and cocoa 
Mineral waters, soft drinks and juices 
ALCOHOLIC BEVERAGES AND 
TOBACCO 
Alcoholic beverages 
Spirits 
Wine 
Beer 
Tobacco 
CLOTHING AND FOOTWEAR 
Clothing 
Clothing materials 
Garments 
Other articles of clothing, accessories 
Dry-cleaning, repair and hire of clothing 
Footwear, including repairs B 
204.5 
184.7 
35.7 
58.7 
13.2 
24.5 
5.6 
12.9 
17.0 
13.2 
3.8 
19.9 
5.1 
14.8 
37.9 
23.8 
3.4 
13.8 
6.6 
14.1 
87.3 
71.8 
1.1 
66.6 
2.6 
1.5 
15.6 DK 
173.7 
155.9 
20.4 
47.2 
4.9 
25.6 
5.0 
8.7 
16.9 
18.5 
8.7 
17.8 
6.0 
11.8 
59.4 
29.5 
3.2 
10.1 
16.2 
29.9 
60.0 
51.0 
0.7 
46.5 
2.4 
1.4 
9.0 D 
154.1 
136.0 
28.0 
38.5 
4.3 
21.0 
4.6 
10.6 
12.2 
11.5 
5.2 
18.1 
6.8 
11.3 
50.9 
24.7 
3.4 
6.4 
15.0 
26.2 
83.8 
70.9 
0.7 
64.5 
3.0 
2.8 
12.9 EL 
231.7 
221.8 
30.1 
56.4 
16.3 
36.8 
19.2 
19.1 
22.7 
14.6 
. 6.7 
9.9 
3.8 
6.0 
39.3 
6.6 
2.6 
1.7 
2.3 
32.6 
121.7 
95.3 
1.3 
85.6 
5.7 
2.8 
26.5 E 
275.4 
262.3 
36.3 
75.4 
35.2 
35.6 
17.6 
26.4 
24.8 
8.1 
2.9 
13.1 
6.5 
6.6 
31.8 
11.5 
2.1 
6.2 
3.2 
20.3 
114.4 
92.3 
3.3 
84.2 
3.6 
1.2 
22.1 F 
192.7 
180.3 
26.7 
'62.9 
12.8 
27.3 
6.7 
13.8 
14.9 
12.5 
2.7 
12.4 
5.1 
7.3 
46.1 
24.8 
5.4 
17.3 
2.1 
21.3 
74.7 
60.3 
0.6 
52.8 
5.1 
1.8 
14.4 IRL 
195.7 
181.0 
35.9 
52.0 
4.5 
28.8 
7.0 
9.1 
21.1 
13.3 
9.2 
14.7 
4.8 
9.8 
80.3 
28.9 
11.5 
8.5 
9.0 
51.4 
68.5 
"• 53.2 
0.5 
49.6 
0.6 
2.5 
15.2 I 
197.4 
187.3 
25.6 
55.3 
12.3 
31.2 
8.6 
18.6 
25.6 
9.2 
0.9 
10.1 
5.0 
5.1 
30.2 
11.3 
2.6 
7.3 
1.5 
18.8 
117.5 
94.9 
1.1 
83.0 
1.8 
9.0 
22.6 L 
162.0 
146.0 
25.4 
49.1 
7.7 
19.9 
5.3 
11.7 
13.9 
9.6 
3.4 
16.0 
6.7 
9.3 
29.1 
18.2 
1.8 
11.7 
4.7 
10.9 
117.3 
94.7 
0.3 
90.4 
1.3 
2.7 
22.6 NL 
170.5 
156.7 
30.4 
42.2 
4.0 
28.1 
4.4 
13.8 
18.2 
11.1 
4.4 
13.9 
6.2 
7.7 
35.2 
19.4 
5.0 
7.0 
7.4 
15.7 
75.4 
60.9 
2.6 
52.7 
4.5 
1.0 
14.6 A 
143.3 
129.3 
22.9 
39.1 
2.8 
22.1 
5.5 
8.4 
12.5 
11.6 
4.4 
13.9 
5.8 
8.2 
39.2 
20.2 
3.8 
8.3 
8.1 
19.0 
82.4 
70.3 
1.4 
62.8 
3.5 
2.6 
12.1 P 
295.0 
287.2 
44.0 
86.4 
39.1 
35.3 
26.5 
20.7 
24.9 
8.6 
1.7 
7.8 
4.1 
3.7 
45.3 
26.3 
1.8 
22.1 
2.4 
19.0 
103.6 
78.5 
2.0 
71.3 
3.8 
1.4 
25.1 FIN 
164.0 
149.3 
30.1 
• 34.7 
6.4 
30.6 
5.3 
12.0 
12.6 
14.5 
3.1 
14.7 
6.3 
8.4 
92.2 
55.6 
22. le 
10.0e 
23.5e 
36.6 
77.4 
65.4 
3.2 
59.0 
2.8 
0.5 
12.0 S 
179.8 
163.1 
28.5 
37.1 
9.5 
27.9 
5.9 
11.4 
18.4 
20.9 
3.5 
16.6 
6.2 
10.5 
62.2 
36.4 
12.7 
12.2 
11.4 
25.9 
69.0 
57.9 
1.3 
52.9 
3.3 
0.4 
11.1 UK 
149.0 
137.0 
25.0 
34.0 
6.0 
21.0 
4.0 
9.0 
19.0 
12.0 
7.0 
12.0 
4.0 
8.0 
69.0 
35.0 
10.0 
15.0 
10.0 
34.0 
66.0 
54.0 
49.0 
4.0 
1.0 
12.0 IS 
203.6 
178.1 
" 33.5 
40.3 
8.8 
37.0 
4.6 
11.5 
13.8 
20.1 
8.7 
25.4 
5.5 
19.9 
39.0 
20.9 
• 9.1 
4.0 
7.8 
18.1 
71.0 
57.6 
1.2 
50.4 
4.0 
2.0 
13.4 N 
172.6 
156.3 
18.3 
38.9 
10.7 
30.4 
4.5 
11.7 
14.2 
16.2 
11.5 
16.1 
4.o 
11.5 
35.1 
17.5 
3.9 
5.3 
8.2 
17.8 
69.4 
58.0 
1.2 
53.2 
2.7 
1.0 
11.4 
page 581 
04. 
04.1. 
04.3. 
04.3.1. 
04.3.2. 
04.4.A 
04.5. 
04.5.1. 
04.5.2. 
04.5.3. 
04.5.4. 
04.5.5. 
05. 
05.1. 
05.1.1. 
05.1.2. 
05.1.3. 
05.2. 
05.3. 
05.3.1/2 
05.3.3. 
05.4. 
05.5. 
05.6. HOUSING, WATER, ELECTRICITY, 
GAS AND OTHER FUELS 
Actual rentals for housing 
Regular maintenance and repair of the 
dwelling 
Products for the regular maintenance and 
repair of the dwelling 
Services for the regular maintenance and 
repair of the dwelling 
Other services relating to the dwelling 
Electricity, gas and other fuels 
Electricity 
Gas 
Liquid fuels 
Solid fuels 
Hot water, steam and ice 
FURNISHINGS, HOUSEHOLD 
EQUD7MENT AND ROUTINE 
MAINTENANCE OF THE HOUSE 
Furniture, furnishings and decorations, 
carpets, other floor coverings and repairs 
Furniture and furnishings 
Carpets and other floor coverings 
Repair of furniture, furnishings and floor 
coverings 
Household textiles 
Heating and cooking appliances, 
refrigerators, washing machines, similar 
major household appliances, incl. repairs 
Major household appliances (electric or not) 
and small electric household appliances 
Repair of household appliances 
Glassware, tableware, household utensils 
Tools and equipment for house and garden 
Goods and services for routine household 
maintenance B 
156.1 
60.3 
19.2 
13.8 
5.4 
10.3 
66.2 
43.6 
10.7 
10.6 
1.4 
91.7 
30.2 
27.7 
2.5 
8.5 
17.1 
14.4 
2.7 
5.4 
6.0 
24.5 DK 
194.6 
91.5 
22.9 
12.1 
10.8 
13.3 
66.9 
25.9 
7.6 
15.1 
18.3d 
65.8 
23.5 
19.3 
3.4 
0.8 
6.7 
12.3 
10.6 
1.7 
6.7 
4.0 
12.6 D 
202.7 
99.6 
11.5 
6.4 
:' 5.2 
37.2 
54.3 
26.5 
7.1 
7.4 
3.1 
10.3 
78.9 
33.4 
27.0 
6.2 
0.2 
6.5 
12.8 
12.1 
0.7 
5.8 
8.4 
12.0 EL 
140.4 
43.9 
22.9 
9.1 
13.8 
19.0 
54.7 
24.8 
2.3 
23.9 
3.7 
89.3 
16.6 
14.5 
2.1 
15.4 
10.8 
9.5 
1.3 
9.2 
2.1 
35.2 E 
112.0 
14.5 
40.5 
27.3 
13.3 
24.9 
32.0 
20.1 
7.7 
4.2 
64.7 
16.9 
15.2 
0.4 
1.4 
5.6 
10.8 
9.4 
1.5 
3.9 
2.0 
25.4 F 
138.7 
63.0 
18.5 
2.9 
15.6 
10.2 
47.0 
26.7 
10.8 
6.9 
0.6 
2.0 
74.1 
24.9 
22.5 
1.7 
0.7 
7.6 
13.0 
11.5 
1.5 
8.8 
3.4 
16.4 IRL 
125.6 
18.5 
1.0 
0.5 
0.5d 
3.1 
102.9 
21.5 
4.7 
8.2 
17.0 
51.4d 
60.0 
18.8 
6.5 
2.9 
9.4d 
4.4 
&8 
8.3 
0.5 
4.3 
5.2 
18.5 I 
99.5 
25.7 
13.6 
1.8 
11.7 
19.8 
40.4 
15.6 
18.0 
6.8 
99.8 
35.0 
33.4 
1.6 
12.7 
10.6 
9.8 
0.8 
5.8 
1.4 
34.3 L 
132.7 
56.2 
21.4 
12.4 
9.0 
11.1 
44.0 
20.2 
10.1 
12.8 
0.9 
120.3 
55.9 
51.6 
4.3 
10.4 
13.5 
13.2 
0.3 
4.5 
7.2 
28.8 NL 
187.4 
99.1 
22.4 
12.5 
10.0 
11.7 
54.2 
54.2 
96.0 
37.0 
28.9 
8.1 
11.6 
10.6 
9.9 
0.8 
6.8 
5.1 
24.9 A 
137.6 
56.3 
20.7 
10.4 
10.2 
10.7 
49.9 
23.1 
6.9 
6.7 
7.8 
5.3 
98.5 
42.7 
39.2 
3.5 
10.3 
20.0 
17.7 
2.3 
7.0 
4.1 
14.4 P 
73.1 
17.8 
10.9 
2.5 
8.4 
6.8 
37.6 
23.8 
10.5 
3.3 
; 
78.8 
29.0 
25.7 
2,4 
0.9 
7.7 
15.9 
10.1 
5.8 
5.0 
1.3 
19.9 FIN 
135.2 
42.5de 
26.3 
1.0 
25.3e 
20.6e 
45.7 
38.5e 
0.2 
5.5 
1.5 
i 
64.7 
20.2 
15.3 
4.9 
7.8 
12.6 
11.4 
1.2 
7.5 
5.0 
11.6 S 
208.9 
129.5d 
0.9 
0.9 
9.4 
69.1 
44.3 
0.5 
7.3 
": 
17.0de 
64.0 
28.9 
25.4 
3.5 
• 
6.5 
8.4 
7.4 
1.1 
5.1 
5.0 
10.1 UK 
131.0 
54.0 
18.0 
8.0 
10.0 
14.0 
45.0 
22.0 
20.0 
1.0 
2.0 
89.0 
37.0 
27.0 
10.0 
6.0 
13.0 
11.0 
2.0 
7.0 
9.0 
17.0 IS 
114.9 
29.8 
14.2 
11.8 
2.4 
25.4 
45.7 
20.8 
24.9 
74.1 
28.8 
26.8 
0.3 
1.7 
10.7 
12.0 
11.4 
0.6 
6.2 
3.9 
12.5 N 
184.5 
67.6 
42.7 
17.6 
24.9 
14.3 
60.0 
53.8 
4.5 
1.5 
0.1 
85.4 
30.3 
27.5 
2.8 
7.4 
17.2 
15.8 
1.3 
5.2 
8.7 
16.7 
page 59, 
page60jff, 05.6.1. 
05.6.2. 
06.A 
07.-
07.1 
07.1.1. 
07.1.2/3 
07.2. 
07.2.1. 
07.2.2. 
07.2.3. 
07.2.4.A 
07.3. 
07.3.l.A 
07.3.2.A 
07.3.3.A 
07.3.4.A 
07.3.5.A 
07.3.6.A 
08. 
08.1. 
08.1.1. 
08.1.2/3 
09. 
09.1. 
09.1.1. 
09.1.2. 
09.1.3. 
09.1.4. Non-durable household goods 
Domestic services and home care services 
HEALTH - paid by the consumer and not 
reimbursed 
TRANSPORT * 
Purchase of vehicles 
New and second-hand motor cars 
Motor cycles and bicycles 
Operation of personal transport equipment 
Spares parts and accessories 
Fuels and lubricants 
Maintenance and repairs 
Other services in respect of personal 
transport equipment 
Transport services 
Passenger transport by railway 
Passenger transport by road 
Passenger transport by air 
Passenger trans, by sea and inland waterway 
Other purchased transport services 
Combined tickets 
COMMUNICATIONS 
Communications 
Postal services 
Telephone and telefax equip, and services 
RECREATION AND CULTURE 
Equipment and accessories, incl. repairs 
~ ' 1j i 
Equipment for the reception, recording and 
reproduction of sound and pictures 
Photographic and cinematographic 
equipment and optical instruments 
Data processing equipment 
Other major durables for recreat. and culture B 
13.6 
10.9 
8.7 
135.1 
58.9 
54.6 
4.3 
68.3 
5.4 
40.6 
19.7 
2.6 
7.9 
4.1 
2.5 
1.3 
23.7 
23.7 
1.2 
22.5 
124.8 
43.5 
6.8 
1.2 
4.9 
2.7 DK 
8.6 
4.0 
7.4 
179.7 
63.8 
58.6 
5.2 
82.6 
11.6 
32.4 
35.3 
3.3 
33.3 
2.8 
10.4 
5.1 
3.7 
1.8 
9.5 
23.1 
23.1 
1.9 
21.2 
100.1 
46.0 
10.2 
0.6 
3.7 
2.4 D 
8.5 
3.6 
8.5 
173.1 
83.1 
79.0 
4.0 
73.5 
6.0 
36.3 
22.7 
8.5 
16.6 
3.2 
0.8 
0.7 
0.8 
0.5 
10.6 
19.5 
19.5 
2.7 
16.8 
108.7 
46.2 
9.2 
3.8 
2.8 
2.2 EL 
25.5 
9.8 
11.9 
125.6 
40.6 
38.8 
1.8 
68.0 
12.3 
39.6 
11.2 
5.0 
17.0 
0.3 
7.3 
2.7 
2.0 
0.8 
3.9 
22.3 
22.3 
0.3 
22.0 
49.5 
16.0 
1.1 
2.6 
0.6 
0.1 E 
16.0 
9.4 
8.4 
145.6 
57.5 
54.0 
3.5 
72.1 
4.5 
44.5 
17.5 
5.6 
16.0 
2.1 
12.3 
1.4 
0.2 
: 
15.8 
15.8 
0.4 
15.5 
69.3 
24.1 
6.4 
0.9 
1.2 F 
11.5 
4.9 
4.8 
191.4 
44.8 
43.2 
1.6 
118.4 
31.9 
49.1 
27.9 
9.5 
28.2 
7.5 
6.8 
5.8 
0.4 
0.8 
6.9 
20.2 
20.2 
3.0 
17.2 
.88.2 
40.2 
7.6 
0.9 
0.2 
1.5 IRL 
12.8 
5.7 
6.0 
U7.0 
43.7 
42.1 
1.7 
57.4 
5.4 
43.5 
6.9 
1.6 
15.9 
1.9 
10.0 
1.7 
0.3 
0.3 
1.7 
21.2 
21.2 
1.4 
19.8 
124.9 
40.6 
8.5 
0.5 
0.6 
1.6 I 
18.0 
16.3 
16.0 
126.8 
41.3 
37.1 
4.2 
63.5 
2.8 
27.5 
28.1 
5.1 
21.9 
3.1 
6.7 
2.4 
1.3 
2.7 
5.8 
17.8 
17.8 
3.3 
14.5 
82.8 
43.5 
13.1 
1.8 
1.5 
4.5 L 
13.1 
15.7 
2.8 
160.9 
82.5 
77.4 
5.1 
70.8 
5.7 
32.2 
28.5 
4.4 
7.6 
0.9 
, 1.3 
1.9 
• 
0.5 
3.0 
17.0 
17.0 
1.5 
15.5 
137.6 
45.9 
8.6 
4.8 
3.8 
3.5 NL 
11.7 
13.2 
7.6 
159.3 
66.8 
60.6 
6.2 
68.2 
6.8 
37.1 
17.4 
6.9 
24.3 
9.2 
8.8 
4.7 
1.3 
0.3 
24.6 
24.6 
3.2 
21.5 
139.3 
54.9 
9.6 
2.3 
1.1 
6.5 A 
10.4 
3.9 
4.1 
148.0 
51.3 
45.3 
6.0 
82.7 
4.8 
39.0 
32.0 
7.0 
14.1 
3.3 
6.2 
0.0 
4.5 
22.4 
22.4 
1.7 
20.7 
113.0 
48.7 
8.8 
1.8 
2.5 
2.3 P 
11.6 
8.3 
5.6 
178.1 
72.0 
68.9 
3.1 
88.1 
7.0 
31.0 
46.7 
3.4 
18.0 
1.6 
5.1 
1.5 
0.0 
1.6 
8.2 
12.0 
12.0 
0.1 
11.9 
38.8 
15.4 
7.0 
1.0 
0.7e 
0.4e FIN 
9.2 
2.5 
11.2 
192.8 
85.5 
78.8 
6.8 
78.5 
10.9 
52.6 
10.1 
5.0 
28.7 
5.5 
10.9 
5.0 
4.3 
3.1 
16.9 
16.9 
1.7 
15.2 
123.5 
51.6 
9.3 
3.7 
1.8 
9.0 S 
10.1 
12.1 
177.3 
44.1 
42.6 
1.5 
101.5 
17.0 
53.5 
25.2 
5.8 
31.7 
4.2 
3.0 
6.5 
4.1 
0.4 
13.4 
29.1 
29.1 
4.5 
24.6 
108.2 
52.6 
9.0 
2.5 
2.3 
5.4 UK 
9.0 
8.0 
7.0 
152.0 
57.0 
55.0e 
2.0 
76.0 
8.0e 
40.0 
21.0e 
7.0 
19.0 
7.0 
9.0 
2.0 
1.0 
21.0 
21.0 
2.0 
19.0 
130.0 
46.0 
8.0e 
5.0e 
5.0e IS 
11.1 
1.4 
9,2 
186,5 
63.3 
60.3 
3.0 
98.7 
12.7 
60.5 
15.5 
10.0 
24.5 
9.6 
13.9 
1.0 
15.7 
15.7 
1.8 
13.9 
143.5 
45.1 
7.4 
2.2 
5.1 
1.6 N 
14.3 
2.4 
7.1 
201.8 
70.3 
65.7 
4.6 
90.9 
8.7 
52.8 
15.9 
13.5 
40.6 
5.5 
12.5 
13.0 
4.5 
• 
5.2 
21.1 
21.1 
1.4 
19.7 
140.9 
52.8 
11.6 
1.8 
3.6 
8.3 
09.1.5. 
09.1.6. 
09.1.7. 
09.1.8. 
09.1.9. 
09.2.A 
09.3. 
09.4. 
10.A 
11. 
11.1. 
11.1.1. 
11.1.2 
11.2. 
12. 
12.1. 
12.1.1. 
12.1.2. 
12.2. 
12.4.A 
12.4.2.A 
12.4.4.A 
12.5.A 
12.6.A Games, toys and hobbies, equipment for 
sport, camping and open-air recreation 
Recording media for pictures and sound 
Gardening 
Pets 
Repair of equipment and accessories for 
recreation and culture 
Recreational and cultural services 
Newspaper, books and stationery 
Package holidays 
EDUCATION - commonly paid by 
consumers in Member States 
HOTELS, CAFES AND RESTAURANTS 
Catering 
Restaurants and cafés 
Canteens 
Accommodation services 
MISCELLANEOUS GOODS AND 
SERVICES 
Personal care 
Hairdressing salons and personal grooming 
establishments 
Appliances, articles, and products for 
personal care 
Personal effects n.e.c. 
Insurance 
Insurance connected with the dwelling -
Contents 
Insurance connected with transport - Car 
Banking services n.e.c. 
Other services n.e.c. B 
6.5 
6.0 
8.1 
6.0 
1.3 
27.7 
22.1 
31.4 
: 
70,6 
65.4 
61.1 
4.3 
5.2 
59.5 
29.4 
13.1 
16.3 
6.9 
8.7 
1.2 
7.6 
3.5 
11.0 DK 
10.1 
5.2 
7.0 
5.3 
1.5 
25.1 
16.4 
12.6 
3.3 
66.9 
59.5 
59.5 
7.4 
66.0 
19.9 
7.8 
12.1 
8.5 
3.5 
1.3 
2.2 
20.4 
13.7 D 
11.5 
3.6 
8.8 
2.5 
1.7 
24.4 
21.4 
16.8 
4,6 
68.4 
52.3 
46.8 
5.5 
16.1 
46.9 
24.5 
10.7 
13.8 
9.4 
5.7 
2.3 
3.4 
2.0 
5.3 EL 
5.2 
2.0 
2.6 
0.9 
0.9 
11.3 
19.7 
2.6 
13.7 
90,4 
84.2 
80.3 
3.9 
6.2 
64.3 
24.1 
3.8 
20.2 
10.5 
.11.6 
0.5 
11.1 
: 
18.1 E 
5.8 
5.3 
1.2 
1.0 
2.5 
17.5 
19.9 
7.8 
1.2 
117.8 
111.9 
109.1 
2.8 
5.9 
43.5 
25.7 
9.7 
16.0 
5.7 
4.0 
0.5 
3.4 
0.1 
8.1 F 
9.9 
8.8 
6.8 
2.5 
2.0 
24.7 
21.9 
1.4 
3.7 
91.2 
71.3 
54.7 
16.6 
' 19.9 
74.2 
31.1 
11.4 
19.7 
13.9 
11.7 
5.1 
6.6 
7.0 
10.5 IRL 
5.7 
2.9 
5.8 
3.3 
11.7d 
29.4 
24.3 
30.6 
6.0 
156.9 
153.6 
144.8 
8.8 
3.4 
37.9 
25.6 
11.7 
13.9 
5.3 
2.5 
0.6 
1.9 
1.1 
3.4 I 
8.2 
3.6 
6.9 
3.6 
0.4 
17.1 
22.1 
: 
8.6 
119.5 
89.6 
84.9 
4.7 
30.0 
84.1 
39.3 
21.3 
18.0 
30.3 
1.8 
* 
1.8 
3.2 
9.5 L 
5.8 
3.8 
9.4 
5.0 
1.2 
21.6 
20.1 
50.0 
3.4 
63.6 
59.7 
56.3 
3.4 
3.9 
53.3 
29.6 
13.2 
16.4 
10.9 
5.5 
0.5 
5.0 
0.3 
7.0 NL 
8.9 
6.6 
10.4 
8.1 
1.4 
34.0 
34.0 
16.4 
3.0 
48.6 
39.8 
37.0 
2.8 
8.8 
53.1 
25.2 
10.6 
14.6 
8.8 
9.8 
3.5 
6.3 
0.3 
9.0 A 
10.9 
4.4 
10.0 
6.2 
1.9 
29.1 
18.4 
16.8 
3.9 
157.4 
114.8 
107.9 
6.9 
42.6 
50.2 
27.4 
10.5 
16.9 
12.7 
7.0 
. 2.7 
4.4 
2.1 
1.0 P 
2.5 
2.3 
1.5 
9.7 
10.5 
3.2 
0.8 
121.7 
119.5 
111.4 
8.1 
2.2 
47.2 
30.6 
15.0 
15.6 
10.8 
5.3 
0.6e 
4.7e 
0.2 
0.3 FIN 
13.0 
2.9 
6.9 
4.4 
0.6 
19.6 
30.4 
22.0 
1.3 
80.4 
73.1 
72.7 
0.4 
7.3 
40.5 
23.9 
9.9 
14.0 
9.9 
3.7 
1.4c 
2.3e 
0.9 
2.2 S 
9.0 
5.6 
10.9 
2.9d 
5.2 
23.4 
22.7 
9.5 
1.7 
47,7 
43.4 
37.0 
6.4 
4.3 
40.0 
18.8 
6.8 
12.0 
9.2 
7.3 
2.8 
4.5 
1.5 
3.1 UK 
8.0 
4.0 
6.0 
9.0 
1.0 
34.0 
20.0 
30.0 
11.0 
127.0 
123.0 
116.0 
7.0 
4.0 
48.0 
26.0 
7.0 
19.0 
9.0e 
6.0 
2.0 
4.0 
2.0 
5.0 IS 
13.0 
5.2 
6.6 
2.Î 
2.1 
46.6 
27.3 
24.5 
« 
64.8 
61.0 
51.8 
9.2 
3.8 
77.7 
33.8 
14.6 
19.1 
7.1 
6.6 
25 
4.1 
13.8 
16.4 N 
10.7 
5.9 
6.9 
1.9 
2.2 
35.8 
32.0 
20.2 
1.8 
45.4 
40.4 
37.0 
3.3 
5.0 
35.0 
24.3 
9.8 
14.5 
5.4 
5.3 
11 
4.1 
• 
: 
page 61J 

ISSN 0254-1475 
COM(98) 104 final 
DOCUMENTS 
EN 10 11 09 17 
Catalogue number : CB-CO-98-133-EN-C 
ISBN 92-78-31765-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg