STAT/06/108
17 August 2006
July 2006 Euro area annual inflation down to 2.4% EU25 unchanged at 2.4%
Euro area annual inflation was 2.4% in July 20061, down from 2.5% in June. A year earlier the rate was 2.2%. Monthly inflation was -0.1% in July 2006. EU25 annual inflation was 2.4% in July 20062, unchanged compared to June. A year earlier the rate was 2.1%. Monthly inflation was -0.1% in July 2006. EICP3 annual inflation was 2.4% in July 2006.
These figures come from Eurostat, the Statistical Office of the European Communities.
Inflation in the Member States
In July 2006, the lowest annual rates were observed in Poland and Finland (both 1.4%), the Netherlands and Sweden (both 1.8%), and the highest rates in Latvia (6.9%), Slovakia (5.0%), Estonia (4.5%) and Lithuania (4.4%). Compared with June 2006, annual inflation rose in eleven Member States, remained stable in four and fell in ten.
The lowest 12-month averages4 up to July 2006 were in Finland (1.2%), Poland (1.3%), Sweden (1.4%) and the Netherlands (1.7%); the highest were in Latvia (7.0%), Estonia (4.4%), Luxembourg and Slovakia (both 3.9%).
Euro area
The main components with the highest annual rates in July 2006 were housing (5.0%), transport (4.1%) and alcohol and tobacco (2.8%), while the lowest annual rates were observed for communications (-3.4%), clothing (-0.2%) and recreation and culture (0.3%). Concerning the detailed sub-indices, fuels for transport had the largest upward impact on the headline rate (+0.30 percentage points), followed by gas (+0.19), while telecommunications (-0.18) and garments (-0.15) had the biggest downward impacts.
The main components with the highest monthly rate were recreation and culture and hotels and restaurants (both 1.1%), and the lowest were clothing (-7.1%) and household equipment (-0.3%). In particular, package holidays (+0.13 percentage points) and fuels for transport (+0.10) had the largest upward impact, while garments (-0.42) and footwear (-0.10) had the biggest downward impact.
Annual inflation (%) in July 2006 in ascending order
Euro area Member States
FI NL AT DE FR PT IT BE Euro area IE LU EL ES 1.4 1.8p 2.0p 2.1 2.2 2.2 2.3 2.4 2.4p 2.9 3.4 3.9 4.0 EU Member States outside the Euro area
PL SE SI DK UK2 CZ EU25 CY HU MT LT EE SK LV 1.4 1.8 1.9 2.0 2.4 2.4 2.4p 2.8 3.2 3.6 4.4 4.5 5.0 6.9 Inflation rates in %, measured by HICPs
Annual rates 12 Month average rates4 Monthly rates Jul 06 Jul 05 Jun 06 Jun 05 May 06 May 05 Apr 06 Apr 05 Jul 05 Jul 04 Jul 06-05 Jul 05-04 Jul 06 Jun 06 Belgium (BE) 2.4 2.5 2.8 2.6 2.7 2.6 -1.1 Germany (DE) 2.1 2.0 2.1 2.3 1.8 2.2 0.5 Greece (EL) 3.9 3.4 3.3 3.5 3.9 3.5 -0.8 Spain (ES) 4.0 4.0 4.1 3.9 3.3 3.8 -0.5 France (FR) 2.2 2.2 2.4 2.0 1.8 2.1 -0.2 Ireland (IE) 2.9 2.9 3.0 2.7 2.2 2.6 -0.1 Italy (IT) 2.3 2.4 2.3 2.3 2.1 2.3 -0.3 Luxembourg (LU) 3.4 3.9 3.6 3.5 4.0 3.9 -0.6 Netherlands (NL) 1.8p 1.8 1.8 1.8 1.5 1.7p -0.3p Austria (AT) 2.0p 1.9r 2.1 2.1 2.1 1.8p -0.2p Portugal (PT) 2.2 2.8 2.9 2.9 1.9 2.7 -0.1 Finland (FI) 1.4 1.5 1.7 1.5 0.9 1.2 -0.5 Euro area (MUICP) 2.4p 2.5 2.5 2.4 2.2 2.4p -0.1p Czech Republic (CZ) 2.4 2.3 2.8 2.3 1.4 2.3 0.4 Denmark (DK) 2.0 2.1 2.1 1.8 1.8 2.1 -0.3 Estonia (EE) 4.5 4.4 4.6 4.3 3.9 4.4 0.4 Cyprus (CY) 2.8 2.6 2.5 2.5 1.3 2.2 -1.3 Latvia (LV) 6.9 6.3 7.1 6.1 6.3 7.0 0.6 Lithuania (LT) 4.4 3.7 3.6 3.4 1.9 3.2 0.5 Hungary (HU) 3.2 2.9 2.9 2.4 3.6 2.9 0.2 Malta (MT) 3.6 3.3 3.5 3.5 1.7 3.1 0.4 Poland (PL) 1.4 1.5 1.5 1.2 1.5 1.3 -0.1 Slovenia (SI) 1.9 3.0 3.4 2.8 2.0 2.6 -0.3 Slovakia (SK) 5.0 4.5 4.8 4.4 2.1 3.9 0.1 Sweden (SE) 1.8 1.9 1.9 1.8 0.7 1.4 -0.3 United Kingdom2 (UK) 2.4 2.5 2.2 2.0 2.3 2.2 -0.1 EU25 2.4p 2.4 2.4 2.3 2.1 2.3p -0.1p EICP3 2.4p 2.4 2.4 2.3 2.1 2.3p -0.1p EU15 2.4p 2.4 2.4 2.4 2.2 2.3p -0.1p Iceland 6.3 5.7 4.8 3.3 0.5 2.5 0.4 Norway 2.3 2.1 2.5 2.8 1.3 2.2 -0.2 EEA (EEAICP) 2.4p 2.4 2.4 2.3 2.1 2.3p -0.1p Source: Eurostat p= provisionalr= revised
Note: Annual inflation in the USA was 4.1% in July 2006 (national CPI, not strictly comparable to the HICPs).
Euro area inflation rates in % for main components, measured by HICPs
Weight used in 2006 Annual rates 12 month average rates4 Monthly rates Euro area (MUICP) Jul 06 Jul 05 Jun 06 Jun 05 May 06 May 05 Apr 06 Apr 05 Jul 05 Jul 04 Jul 06-05 Jul 05-04 Jul 06 Jun 06 00 All-items 1000.0 2.4p 2.5 2.5 2.4 2.2 2.4p -0.1p 01 Food 152.7 2.6p 2.0 1.8 1.5 0.3 1.5p -0.1p 02 Alcohol and tobacco 40.0 2.8p 2.8 2.8 2.7 4.2 3.6p 0.4p 03 Clothing 72.7 -0.2p 0.4 0.4 0.4 -0.5 0.0p -7.1p 04 Housing 153.5 5.0p 5.2 5.7 5.3 5.1 5.2p 0.5p 05 Household equipment 75.7 0.9p 0.9 0.9 1.0 0.6 0.8p -0.3p 06 Health 40.3 1.5p 1.5 1.3 1.1 1.8 1.4p 0.1p 07 Transport 157.1 4.1p 4.7 5.2 4.6 4.9 4.9p 0.8p 08 Communications 29.4 -3.4p -3.5 -3.4 -3.7 -2.2 -3.0p 0.0p 09 Recreation and culture 94.7 0.3p 0.1 -0.4 0.5 -0.2 0.1p 1.1p 10 Education 9.7 2.7p 2.6 2.7 2.6 3.3 2.6p 0.1p 11 Hotels and restaurants 92.3 2.5p 2.5 2.4 2.7 2.6 2.5p 1.1p 12 Miscellaneous 81.8 2.2p 2.1 2.2 2.1 1.7 2.0p -0.2p All-items excl. energy 908.0 1.7p 1.6 1.5 1.6 1.2 1.5p -0.3p -excl. energy, FoodAlcTob* 715.3 1.4p 1.4 1.3 1.5 1.3 1.3p -0.4p -excl. energy, unproc. food 833.7 1.6p 1.5 1.4 1.6 1.3 1.5p -0.3p -excl. energy, seas. food 870.6 1.6p 1.6 1.5 1.6 1.3 1.5p -0.3p -excl. tobacco 974.9 2.4p 2.4 2.4 2.4 2.0 2.3p -0.1p Energy 92.0 9.5p 11.0 12.9 11.0 11.7 11.7p 1.4p FoodAlcTob* 192.8 2.7p 2.2 2.0 1.8 1.1 1.9p 0.0p Source: Eurostat * FoodAlcTob= Food, alcohol and tobaccop= provisional
Euro area sub-indices with most important impacts
Weight (‰) 2006 Rate (%) Impact (percentage points) COICOP July 06 / July 05 07.22 Fuels for transport 41.7 9.2p 0.30 04.52 Gas 15.0 15.4p 0.19 04.53 Heating oil 8.8 10.8p 0.08 04.55 District heating 5.2 13.7p 0.06 01.15 Oils and fats 5.5 12.5p 0.05 12.31 Jewellery and watches 5.4 12.1p 0.05 05.31/2 Household appliances 10.1 -1.4p -0.04 07.11 Cars 45.1 1.3p -0.05 09.13 IT equipment 4.0 -11.1p -0.05 09.11 Audio-visual equipment 5.2 -8.5p -0.06 03.12 Garments 53.5 -0.4p -0.15 08.2/3 Telecommunications 27.5 -3.9p -0.18 July 06 /June 06 09.60 Package holidays 14.1 10.5p 0.13 07.22 Fuels for transport 41.7 1.9p 0.10 11.20 Accommodation services 16.2 5.3p 0.09 07.33 Air transport 5.2 7.1p 0.04 04.11/2 Rents 63.2 0.3p 0.03 01.12 Meat 36.9 0.6p 0.03 05.20 Household textiles 5.5 -1.7p -0.01 12.32 Other personal effects 5.7 -3.0p -0.02 09.33 Gardens, plants and flowers 6.2 -3.1p -0.02 01.17 Vegetables 14.6 -2.3p -0.03 03.21/2 Footwear 14.7 -6.7p -0.10 03.12 Garments 53.5 -7.6p -0.42 Source: Eurostatp= provisional
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 rate4 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 (EICP3) 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.
The MUICP is used by, among others, the European Central Bank (ECB) as a main indicator for monetary policy management for the euro area (see ECB press release, 8 May 2003).
The Member States’ HICPs are supplied by the National Statistical Institutes; the MUICP, EICP and EEAICP are compiled by Eurostat. The HICP is computed as an annual chain index allowing weights to be changed each year. HICP aggregates are calculated as weighted averages of the HICPs using the weights of the countries and sub-indices concerned. The weight of a country is its share of the household final monetary consumption expenditure in the euro area total. For the MUICP this is expressed in euro, for the EICP and the EEAICP it is expressed in purchasing power standards. The MUICP is treated as a single entity within the EICP and EEAICP starting from 1999.
Additional information
More information on HICPs can be obtained from the monthly publication Statistics in focus, Economy and Finance, Harmonized indices of consumer prices. About 100 MUICP, EICP, EEAICP and HICP sub-indices with corresponding weights are available in Eurostat’s database.
For technical notes on HICPs see: Eurostat News Release 21/97, 5 March 1997, Harmonizing the way EU measures inflation and Eurostat Memo 8/98, 4 May 1998, New monetary union index of consumer prices (MUICP), Eurostat Memo 02/00, 18 February 2000, Improved EU Harmonized Index of Consumer Prices: Extended coverage and earlier release dates for the HICP, and HICP short guide for users. Further details can be found in the Compendium of HICP reference documents - (2/2001/B/5).
Future release dates
Provisional publication dates for the coming months are:
Index for MUICP flash estimates HICP News Releases August 2006 31 August 2006 15 September 2006 September 2006 29 September 2006 17 October 2006 October 2006 31 October 2006 16 November 2006 The MUICP flash estimate for July 2006, published on 31 July 2006, was 2.5%. The method used by the UK to re-reference to 2005=100 is different from that used by all other EU and EEA countries in that the UK has used unrounded index levels for rescaling and computed inflation rates from the unrounded re-referenced index series. Eurostat applied the harmonized rescaling method to UK data for calculating EU and EEA aggregates. The EICP (EICP=’European Index of Consumer Prices’ as defined in Council Regulation (EC) No 2494/95 of 23 October 1995) is the official EU aggregate. It covers 15 Member States until April 2004 and 25 Member States starting from May 2004. The ten new Member States are integrated into the EICP starting from May 2004 using a chain index formula. Measure used to determine price stability in Convergence reports of 1998, 2000, 2002 and 2004 by the Commission to the Council.The HICP Short Guide for Users, which provides essential information for all users, is available on the Eurostat website.
Issued by: Eurostat Press Office Tim ALLEN BECH Building L-2920 LUXEMBOURG Tel: +352-4301-33 444 Fax: +352-4301-35 349 eurostat-pressoffice@ec.europa.eu For further information on Methodology: Christine WIRTZ Tel: +352-4301-38 137 Fax: +352-4301-33 989 estat-hicp-methods@ec.europa.eu Eurostat News Releases on the Internet: http://ec.europa.eu/eurostat/ 
