May 2012 Euro area annual inflation down to 2.4% EU down to 2.6%

STAT/12/90

14 June 2012

May 2012
Euro area annual inflation down to 2.4%
EU down to 2.6%

Euro area1 annual inflation was 2.4% in May 2012, down from 2.6% in April2. A year earlier the rate was 2.7%. Monthly inflation was -0.1% in May 2012.

EU3 annual inflation was 2.6% in May 2012, down from 2.7% in April. A year earlier the rate was 3.2%. Monthly inflation was 0.0% in May 2012.

These figures come from Eurostat, the statistical office of the European Union.

Inflation in the EU Member States

In May 2012, the lowest annual rates were observed in Greece and Sweden (both 0.9%) and Bulgaria (1.8%), and the highest in Hungary (5.4%), Estonia (4.1%), Cyprus and Malta (both 3.7%). Compared with April 2012, annual inflation fell in twenty Member States, remained stable in three and rose in three.

The lowest 12-month averages4 up to May 2012 were registered in Sweden (1.1%), Ireland (1.5%) and Greece (2.1%), and the highest in Estonia (4.7%), Hungary (4.5%) and Slovakia (4.1%).

Euro area

The main components with the highest annual rates in May 2012 were alcohol & tobacco (4.7%), housing (4.0%) and transport (3.7%), while the lowest annual rates were observed for communications (-3.3%), education (0.7%) and recreation & culture (1.3%). Concerning the detailed sub-indices, fuels for transport (+0.22 percentage points), gas (+0.12), electricity and tobacco (+0.09 each) had the largest upward impacts on the headline rate, while telecommunications (-0.19), audio-visual equipment, cars and rents (-0.06 each) had the biggest downward impacts.

The main components with the highest monthly rates were alcohol & tobacco (0.4%), household equipment and hotels & restaurants (both 0.2%), while the lowest monthly rates were observed for transport (-1.0%) and communications (-0.6%). In particular, fruit (+0.03 percentage points), restaurants & cafés and electricity (+0.02 each) had the largest upward impacts, while fuels for transport (-0.15), air transport, heating oil, vegetables and package holidays (-0.02 each) had the biggest downward impacts.

Annual inflation (%) in May 2012 in ascending order

Euro area

EU Member States outside the euro area

Inflation rates in %, measured by HICPs

Source: Eurostat p = provisional r = revised : = data not available

Euro area inflation rates in % for main components, measured by HICPs

Source: Eurostat * FoodAlcTob = Food, alcohol and tobacco p = provisional

Euro area sub-indices with most important impacts

Source: Eurostat p = provisional

Measures of inflation

An 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.

A 12-month average rate overcomes this volatility by comparing average Harmonised 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.

A monthly rate compares price levels between the two latest months. Although up-to-date, it can be affected by seasonal and other effects.

An 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

Harmonised Indices of Consumer Prices (HICPs) are harmonised inflation figures required under the Treaty on the Functioning of the European Union. They are designed for international comparison of consumer price inflation.

Price changes as measured by the HICPs, the Monetary Union Index of Consumer Prices (MUICP), the European Index of Consumer Prices (EICP) and the European Economic Area Index of Consumer Prices (EEAICP) are used as measures of inflation in the Member States in the European Union, in the euro area, 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. HICPs are computed as annual chain indices 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 total of the country group. 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 Data in focus, Economy and Finance on "Harmonised indices of consumer prices". About 100 MUICP, EICP, EEAICP and HICP sub-indices with corresponding weights are available in Eurostat’s database. Further details can be found on the HICP section of the Eurostat website: http://epp.eurostat.ec.europa.eu/portal/page/portal/hicp/introduction.

Starting from 2012 a new regulation defining harmonised rules for deriving the weights for the HICP has been applied in the Member States. For further information on the change please see:

http://epp.eurostat.ec.europa.eu/portal/page/portal/hicp/documents_pub/HICP_weights_info_note.pdf

Future release dates

Scheduled publication dates for the coming months are:

• Euro area inflation is measured by the MUICP (’Monetary Union Index of Consumer Prices’ as defined in Council Regulation (EC) No 2494/95 of 23 October 1995) which is the official euro area aggregate. The euro area initially included Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland. Greece was included from 1 January 2001, Slovenia from 1 January 2007, Cyprus and Malta from 1 January 2008, Slovakia from 1 January 2009 and Estonia from 1 January 2011. New Member States are integrated into the MUICP using a chain index formula.

• The MUICP flash estimate for May 2012, published on 31 May 2012, was 2.4%.

• EU inflation is measured by the EICP (’European Index of Consumer Prices’ as defined in Council Regulation (EC) No 2494/95 of 23 October 1995) which is the official EU aggregate. The EU included 15 Member States until April 2004, 25 Member States from May 2004 until December 2006 and 27 Member States from January 2007. New Member States are integrated into the EICP using a chain index formula.

• Measure used to determine price stability in Convergence reports by the Commission to the Council.

• Malta’s National Statistics Office has revised the indices for 'Passenger transport by road' for the period between July 2011 and March 2012, which has resulted in revisions for Maltese aggregated indices.

• Data for the United Kingdom for May 2012 were not available in time for publication. Due to this fact EU and EEA totals have been calculated using Eurostat estimates.

Eurostat News Releases on the internet: http://ec.europa.eu/eurostat

Selected Principal European Economic Indicators: http://ec.europa.eu/eurostat/euroindicators