HICP

What the HICP is

The Harmonised Index of Consumer Prices (HICP) — German Harmonisierter Verbraucherpreisindex (HVPI) — is the European Union's central inflation indicator. It is calculated under a single EU methodology so that inflation rates across member states are directly comparable. The HICP is the ECB's target measure for its 2% inflation goal and the reference for numerous EU treaties and wage agreements.

The legal basis is EU Regulation 2016/792, which mandates production of the HICP by national statistical offices under the supervision of Eurostat. Statistik Austria is responsible in Austria; Destatis in Germany.

Methodological differences from national VPI

The HICP departs from the national consumer price index (VPI) on several points:

• Consumption concept: The HICP covers only domestic consumption; the national VPI captures consumption by the resident population (including abroad). Practical effect: tourist spending feeds into the HICP, while residents' foreign travel does not.
• Housing costs: The HICP only weakly captures owner-occupied housing (OOH) — a much-criticised gap that can understate real living costs. Eurostat has been working for years on full OOH integration, originally scheduled for 2026 but now delayed to 2028.
• Weighting: Both indices use consumption structures updated annually; in the HICP the adjustment follows the harmonised European COICOP classifications.

Latest readings and sub-aggregates

In May 2026 the euro-area HICP came in at 2.1% (Eurostat flash, year-on-year). The sub-aggregates show the typical post-2024 configuration:

• Energy: −1.8% (deflation, the lasting effect of the gas-price decline)
• Food, alcohol, tobacco: 2.4%
• Non-energy industrial goods: 0.6%
• Services: 3.4% (sticky inflation, wage-cost pressure)

The ECB watches services inflation in particular, because it takes on average 50% longer to return to target than goods inflation.

Role in monetary policy

In 2021 the ECB reformulated its target from "below, but close to 2%" to a symmetric 2% target — overshoots and undershoots matter equally in both directions. It uses the HICP as its main metric and additionally tracks core inflation (excluding energy and unprocessed food) to judge persistence.

The monthly HICP release in the middle of the following month is the most important macro date on the ECB calendar. Markets routinely react to consensus surprises of just ±0.1 percentage points with moves in bonds and currencies.

For policy-rate decisions, the HICP is therefore the single most important — though not the only — data point.