These figures come from Eurostat, the Statistical Office of the European Communities.
Inflation in the Member States
In November 2006, the lowest annual rates were observed in Malta (0.9%), the Czech Republic (1.0%), Cyprus, Poland and Finland (1.3% each), and the highest rates in Hungary (6.4%), Latvia (6.3%) and Estonia (4.7%). Compared with October 2006, annual inflation rose in twenty-two Member States and fell in two.
The lowest 12-month averages3 up to November 2006 were in Poland (1.2%), Finland (1.3%) and Sweden (1.5%); the highest were in Latvia (6.6%) and Estonia and Slovakia (4.3% each).
Euro area
The main components with the highest annual rates in November 2006 were housing (3.6%), education (3.5%) and food (3.1%), while the lowest annual rates were observed for communications (-2.7%), recreation and culture
(-0.1%) and transport (0.8%). Concerning the detailed sub-indices, gas (+0.14 percentage points) had the largest upward impact on the headline rate, followed by vegetables (+0.10), while fuels for transport (-0.18) and telecommunications (-0.14) had the biggest downward impacts.
The main components with the highest monthly rates were clothing (0.5%) and food (0.4%), and the lowest were recreation and culture (-0.7%) and communications (-0.4%). In particular, vegetables and garments (both +0.03 percentage points) had the largest upward impact, while package holidays (-0.07) had the biggest downward impact, followed by accommodation services, heating oil and fuels for transport (-0.03 each).
Measures of inflation
The annual rate measures the price change between the current month and the same month of the previous year. This measure is responsive to recent changes in price levels but can be influenced by one-off effects in either month.
The 12-month average rate3 overcomes this volatility by comparing average Harmonized Indices of Consumer Prices (HICPs) in the latest 12 months to the average of the previous 12 months. This measure is less sensitive to transient changes in prices.
The monthly rate compares price levels between the two latest months. Although up-to-date, it can be affected by seasonal and other effects.
The impact of a particular component measures the change in the headline inflation due to the inclusion of that component in the HICP. The impact takes account of both the weight and whether the inflation for that component is higher or lower than the all-items inflation rate. For example, the impact of ‘tobacco’ is equal to the difference between the all-items inflation rate and the rate for ‘all-items excluding tobacco’. Impacts are not strictly additive.
HICPs designed for international comparison
Harmonized Indices of Consumer Prices (HICPs) are harmonized inflation figures required under Article 121 of the Treaty of Amsterdam (109j of the Treaty on European Union). They are designed for international comparison of consumer price inflation. The focus is on quality and comparability among the indices of different countries as well as on their relative movements.
Price changes as measured by the HICPs, the Monetary Union Index of Consumer Prices (MUICP), the European Index of Consumer Prices (EICP2) and the European Economic Area Index of Consumer Prices (EEAICP) are used as measures of inflation in the Member States, in the euro area, in the European Union, and in the European Economic Area.
