Harmonised index of consumer prices - February 2021

Consumer prices
Harmonised index of consumer prices - February 2021
  • Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) was running at 0.3 % in February compared to 0.6 % in January.
  • Core inflation (inflation without energy and unprocessed food) stands at 0.3 % in February, compared to 1.5 % in January. This is due to the extension of sales until mid-February.
  • The inflation rate based on the consumer price index (CPI) for February stood at 0.5 % compared to 0.3 % in January.
  • The sub-indices with the largest upward effect on inflation were tobacco, housing rent, restaurants and cafés, the purchase of passenger vehicles and gas.
  • However, the sub-indices with the largest downward effect on inflation this month were clothing, fruit, motor fuels, pharmaceutical products and shoes.
  • The current measures due to the COVID-19 had an impact on the calculation of the index. For sectors where physical outlets are closed, data are collected online when there is no other data source. For sectors that are completely closed (cafés, restaurants, travels, etc.) prices are carried forward with or without a seasonal correction factor. These methods are in line with the methodological recommendations established by Eurostat in consultation with the National Statistical Institutes (Statbel in Belgium). The objective is to distort as little as possible the global inflation rate. More information is available here.
  • The harmonised index of consumer prices of February for the EU Member States will be published by Eurostat on 17 March.

Inflation based on the European harmonised index of consumer prices (HICP)[1] was running at 0.3 % in February compared to 0.6 % in January. The inflation rate based on the harmonised index of consumer prices at constant tax rates (HICP-CT)[2] was running at 0.1 % in February, compared to 0.7 % in January. The difference in inflation between the HICP and the HICP-CT is largely due to the changes in excise duties on tobacco and the standardisation of VAT rates in the ‘horeca’ sector. These increases are not taken into account in the HICP-CT.

hicp2021 -02a_en

 

Inflation and effect on inflation for the 12 main groups

Based on the breakdown into 12 main groups, the highest inflation rate in February was measured for “Alcoholic beverages and tobacco” (4.2 %). The lowest inflation rate was measured for “Clothing and footwear” (-9.7 %).

The main group with the largest upward effect on inflation in February was “Housing, water, energy” with an effect on inflation of 0.3 percentage points. The largest downward effect was measured for “Clothing and footwear” with -0.5 percentage points.

Inflation[3] and effect[4] on inflation for the overall HICP and 12 main groups

Product group Weight (‰) Inflation on annual basis (%) Effect on inflation (percentage point)
HICP HICP-CT
Dec/20 Jan/21 Feb/21 Feb/21 Dec/20 Jan/21 Feb/21
0 Total expenditure 1.000 0.4 0.6 0.3 0.1      
1 Food and non-alcoholic beverages 180.8 1.6 0.7 -0.1 -0.1 0.2 0.0 -0.1
2 Alcoholic beverages and tobacco 53.6 2.3 1.9 4.2 -2.5 0.1 0.1 0.2
3 Clothing and footwear 52.3 -0.2 0.6 -9.7 -9.7 0.0 0.2 -0.5
4 Housing, water and energy 172.0 -2.0 -1.0 1.8 1.8 -0.4 -0.2 0.3
5 Interior decoration and household appliances 82.3 1.4 0.7 -0.2 -0.2 0.1 0.0 0.0
6 Health 78.8 -0.4 -0.5 -0.2 -0.2 -0.1 -0.1 0.0
7 Transport 116.0 -0.9 -1.2 0.7 0.7 -0.2 -0.3 0.0
8 Communication 33.0 -0.4 0.2 0.5 0.5 0.0 0.0 0.0
9 Recreation and culture 81.9 1.1 2.1 0.5 0.5 0.1 0.2 0.0
10 Education 5.3 0.6 0.5 0.5 0.5 0.0 0.0 0.0
11 Hotels, cafés and restaurants 60.7 1.9 1.7 1.4 1.4 0.1 0.1 0.1
12 Various goods and services 83.3 1.5 1.4 1.0 1.0 0.1 0.1 0.1

Inflation according to specific aggregates

The overall HICP can be broken down into five specific aggregates which together form the total expenditure.

  • Inflation for energy products increased compared to the previous month. It was running at 0.1 % in February compared to -6.7 % in January and -9.2 % in December. Prices increased on average by 3.0 % compared to the previous month. The average inflation rate of this aggregate for the last twelve months is -11.0 %.
  • Inflation for processed food products decreased compared to the previous month. It was running at 1.3 % in February compared to 1.6 % in January.
  • Inflation for unprocessed food (fruit, vegetables, meat and fish) has gone up. It was running at -0.9 % in February compared to -1.4 % in January and 2.0 % in December. Prices increased on average by 1.0 % compared to January. The average inflation rate of this aggregate for the last twelve months is 4.3 %.
  • Inflation for non-energy industrial goods was running at -1.6 % in February, compared to 1.7 % in January and 0.6 %in December. Prices increased on average by 2.2 % compared to January.
  • Inflation for services (including rents) amounted to 1.2 % in February compared to 1.4 % in January and 1.7 % in December. Prices increased on average by 0.5 % compared to the previous month.

Core inflation (inflation without energy and unprocessed food) was running at 0.3 % in February, a decrease compared to 1.5 % in January. Average core inflation over the last 12 months amounts to 1.4 %. Prices of this subaggregate increased by 1.0 % compared to the previous month.

Inflation according to specific aggregates

Specific aggregates Weight (‰) Inflation on annual basis (%) 12-month average (%) Monthly change
Dec/20 Jan/21 Feb/21 Feb/21 Feb/21
Total expenditure 1.000,0 0.4 0.6 0.3 0.3 1.2
Fuels and energy sources 95,6 -9.2 -6.7 0.1 -11.0 3.0
Processed food products 187,2 1.7 1.6 1.3 2.0 0.3
Unprocessed food 47,2 2.0 -1.4 -0.9 4.3 1.0
Non-energy industrial goods 276,9 0.6 1.7 -1.6 0.6 2.2
Services 393,0 1.7 1.4 1.2 1.6 0.5
HICP without energy and unprocessed food (core inflation) 857,2 1.3 1.5 0.3 1.4 1.0

Effect of sub-indices on inflation

The largest upward effect on inflation was caused by tobacco (0.16 percentage points). Housing rent provided an upward effect of 0.14 percentage points. Restaurants, cafés and similar services had an effect of 0.13 percentage points. The purchase of passenger vehicles provided an effect of 0.10 percentage points. Gas provided an upward effect of 0.08 percentage points.

Sub-indices with the largest upward effect on inflation

Sub-index Weight (‰) Effect on inflation (percentage point)
2021 Feb/21
02.2.0 Tobacco 35.0 0.16
04.1.0 Housing rent 80.4 0.14
11.1.1 Restaurants, cafés and similar services 52.9 0.13
07.1.1 Purchase of passenger vehicles 36.8 0.10
04.5.2 Gas 17.1 0.08

The largest downward effect on inflation came from clothing (-0.46 percentage points). Fruit provided an effect of -0.10 percentage points. Motor fuels, pharmaceutical products and footwear had an effect of -0.08 percentage points each.

Sub-indices with the largest downward effect on inflation

Sub-index Weight (‰) Effect on inflation (percentage point)
2021 Feb/21
03.1.2 Clothing 40.2 -0.46
01.1.6 Fruit 12.5 -0.10
07.2.2 Motor fuels 29.6 -0.08
06.1.1 Pharmaceutical products 15.9 -0.08
03.2.0 Footwear 8.3 -0.08

Comparison with neighbouring countries

Since the final HICP of the neighbouring countries will not be published until later, comparisons can only be made based on the first HICP flash estimate for February.

In February, inflation in Belgium was running at 0.3 %, down from the 0.6 % registered in January. The Netherlands registered an inflation rate of 1.9 % in February; an increase compared to an inflation rate of 1.6 % in January. Inflation in France in February amounted to 0.7 % compared to 0.8 % in January. Inflation in Germany was running at 1.6 % in February, and remained unchanged from January.

hicp2021 -02b_en

Since the HICP at constant tax rates for February are not yet published by Eurostat, January is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at 0.7 % in January, slightly down from a rate of 0.8 % in December. In January, this inflation in Germany amounted to 1.8 %, an increase compared to an inflation rate of 1.4 % in December. France's inflation rate rose to 0.5 % in January from -0.3 % in December. In the Netherlands, this inflation rate was running at 1.2 % in January, up from 0.9 % in December.

hicp2021 -02c_en

 


[1] In addition to the national consumer price index (CPI), Statbel also calculates a European harmonised consumer price index (Harmonised Index of Consumer Prices, HICP). The HICP is used to compare inflation rates in the EU Member States. To this end, the applied expenditure approach and methods have been coordinated as much as possible and laid down in European regulations. The results of the CPI and HICP are not the same. This is mainly due to a different weighting and composition of the basket of goods and services on which these indices are based.

The HICP is also used by the European Central Bank in its monetary policy. Additionally, the HICP is used to determine to what extent a Member State meets the inflation criteria set in the Treaty on European Union.

Differences between the HICP and the current CPI are:

  • The weighting of the basket of goods and services in the HICP is mainly based on the national accounts. At lower detailed levels the Household Budget Survey is used. The CPI mostly uses the Household Budget Survey at all levels.
  • The reference population of the HICP consists of private households (including tourists in Belgium) and institutional households (e.g. retirement homes and nursing homes). In the CPI, this population currently consists of private households with a reference person under a maximum age.
  • The HICP uses the concept of domestic expenditure: expenditure in Belgium by the reference population. The CPI uses the concept of national expenditure: expenditure by the reference population irrespective of the location.
  • Seasonal adjustment is not applied in the HICP, but is applied in the CPI to travels abroad and stays in holiday villages.
  • Sales periods in the CPI are systematically spread over 6 months, but are included in the same month in the HICP.
  • Current prices for domestic heating oil are used in the HICP calculation. A weighted 12-month average is applied in the CPI calculation.

[2]The HICP-CT is calculated in the same way as the regular HICP, but the prices in this index are calculated based on constant tax rates. This index therefore reflects the theoretically potential effect of changes in indirect tax rates (such as VAT or excise duties) on measured inflation. However, this is a theoretical effect, since it presupposes that tax changes are immediately and entirely reflected in prices paid by consumers.

[3]Inflation on annual basis measures the price changes between the current month and the same month of the year before. A 12-month average compares the average HICP of the last 12 months with the average of the previous 12 months. A monthly change compares the price levels of the last two months.

[4] The effect on inflation shows the changes on the inflation rate by including the sub-index in the HICP. The effect not only takes the weight of the sub-index into account, but it also takes into account whether the sub-index inflation is higher or lower than that of the total expenditure (overall HICP).