Consumer Price Index (CPI) – Euro-zone

CPI is the key gauge for inflation in the Euro Zone. Inflation, simply put, is a decline in the purchasing power of the Euro, where each Euro buys fewer goods and services due to higher consumer prices. The index tracks changes in the price of a basket of goods and services that a typical household might purchase. When the CPI is high, it indicates that significant inflationary pressures exist in Euro Zone economies. This puts pressure on the European Central Bank to raise interest rates. When CPI comes out lower than expected the ECB is expected to lower interest rates, or keep them lower, to encourage economic growth. As a rule, the Bank adjusts rates in order to keep Europe consumer price inflation in the 0 to 2 percent range.

Core CPI – Euro-zone

The CPI is also expressed as Core CPI, a similar measure that excludes energy and food in the basket of goods for the reason that items are highly volatile in price and can distort the CPI. Some market participants believe that Core CPI provides a better representation of inflation.

The headline figures for the Euro-zone Inflation Index are a monthly and annualized percentage change.

Note: The index is expressed in percentage terms with the previous year set as the base measurement year. For example, if the index shows 103% in 2006, the HICP has increased by 3% compare to the base year 2005. The overall Consumer Price Index data for the twelve European Union member countries is referred to as the Harmonized Price Index (HICP). Also, all Euro-zone price indices tends to overstate the actual level of inflation because they do not take into account the consumer’s ability to substitute less costly goods outside of the CPI basket for goods whose prices have risen inside the basket .

Relevance: Tends to move markets on release
Release Schedule: 9:00 (GMT); monthly, with previous month’s data, near the middle of each month
Source of Report: Eurostat/European Central Bank
Web Address:
Address of Release:
AKA: MUICP, Euro-zone Inflation Index, HICP

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