Harmonised Index of Consumer Prices (HICP)

Harmonised index of consumer prices - February 2024

Consumer prices
Harmonised index of consumer prices - February 2024
  • Belgium's inflation rate based on the European harmonised index of consumer prices (HICP) stood at 3.6% in February compared to 1.5% in January and 0.5% in December.
  • Core inflation (inflation without energy and unprocessed food) stood at 4.1% in February compared to 5.0% in January.
  • The inflation rate based on the consumer price index (CPI) for February stood at 3.2% compared to 1.8% in January.
  • The sub-indices with the largest upward effect on inflation were domestic heating oil, tobacco, restaurants and cafés, private rents and the maintenance and repair of vehicles.
  • The sub-indices with the largest downward effect on inflation were gas and electricity.
  • The harmonised index of consumer prices of February for the EU Member States will be published by Eurostat on 18 March.

The inflation rate based on the European harmonised index of consumer prices (HICP) [1] stood at 3.6% in February compared to 1.5% in January and 0.5% in December. Inflation based on the harmonised index of consumer prices at constant tax rates (HICP-CT)[2]  was running at 1.0% in February, compared to -1.1% in January. The difference in inflation between the HICP and the HICP-CT is largely due to higher excise duties on cigarettes, tobacco, electricity, gas and motor fuels. Indeed, these modifications to taxation are not taken into account in the HICP-CT.

Core inflation, which does not take into account price evolutions of energy products and unprocessed food, stands at 4.1% in February, compared to 5.0% in January and 5.5% in December. Inflation without energy decreased to 4.1% in February compared to 5.1% in January and 5.6% in December.

Food inflation now stands at 3.3% compared to 5.1% the previous month. In the spring of 2022, this inflation began to rise sharply, reaching a peak of 20.3% in March 2023. Since March 2023, it has been gradually decreasing. Inflation for oils, fish, dairy products, bread and cereals and meat has sharply increased until March 2023, but has been declining since then. Inflation for oils stands this month at 1.1%. In March 2023, it was still 31.3%. For dairy products, inflation is now 0.5% compared to 31.0% in March 2023. Fish registers this month an inflation rate of 2.9%. In March 2023, it was still 17.2%. For bread and cereals, inflation stands at 2.3% this month compared to 22.0% in March 2023. Inflation for meat amounts to 4.8% this month compared to 16.8% in March 2023.

Most of the decrease in inflation can be associated with lower energy prices. The contribution of energy to inflation has been negative since January 2023 until January 2024 and now stabilises at 0.0%. As described below, the energy inflation increases. This is not an increase in the pure energy cost, but a consequence of the further extinction of the 12-month impact of the basic packages in the index. Food products provide a contribution of 0.5%.

Electricity is now 12.2% less expensive than a year ago. Natural gas is 3.6% less expensive on an annual basis. Domestic heating oil prices have gone up by 27.3% compared to last year.

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” (9.4%). The lowest inflation rate was measured for “Communication” (1.1%). The main group with the largest upward effect on inflation in February was “Alcoholic beverages and tobacco” with an effect of 0.3 percentage points. The largest downward effect was measured for “Housing, water and energy” with -0.3 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/23 Jan/24 Feb/24 Feb/24 Dec/23 Jan/24 Feb/24
0 Total expenditure 1.000 0.5 1.5 3.6 1.0      
1 Food and non-alcoholic beverages 157.3 7.1 5.1 3.3 3.3 1.2 0.7 -0.1
2 Alcoholic beverages and tobacco 49.0 9.1 8.8 9.4 1.9 0.4 0.4 0.3
3 Clothing and footwear 54.3 2.9 8.9 3.8 3.8 0.2 0.5 0.0
4 Housing, water and energy 164.5 -18.6 -12.6 2.2 -10.2 -4.8 -3.3 -0.3
5 Interior decoration and household appliances 74.4 3.5 3.8 3.5 3.5 0.2 0.2 0.0
6 Health 85.4 4.6 2.8 2.5 2.5 0.3 0.1 -0.1
7 Transport 108.9 4.3 3.1 3.5 2.2 0.4 0.2 0.0
8 Communication 32.2 2.9 1.1 1.1 1.1 0.1 0.0 -0.1
9 Recreation and culture 87.1 3.4 3.2 3.1 3.1 0.3 0.2 0.0
10 Education 5.1 7.5 7.5 7.5 7.5 0.0 0.0 0.0
11 Hotels, cafés and restaurants 93.1 8.0 6.5 6.1 6.1 0.7 0.5 0.2
12 Various goods and services 88.7 5.5 3.9 3.5 3.5 0.4 0.2 0.0

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. In February, it amounted to -0.2% compared to -22.3% in January and -28.7% in December. Prices increased by 11.0% on average compared to the previous month. The average inflation rate of this aggregate for the last twelve months is -28.4%.
  • Inflation for processed food products decreased from 5.6% in January to 4.7% in February. In December, it was 7.6%. Prices increased by 0.2% on average compared to the previous month. The average inflation rate for the last twelve months is 10.9%.
  • Inflation for unprocessed food (fruit, vegetables, meat and fish) amounts to 4.6% in February compared to 7.1% in January and 7.5% in December. Prices increased on average by 0.5% compared to January. The average inflation rate of this aggregate for the last twelve months is 10.8%.
  • Inflation for non-energy industrial goods stood at 2.4% in February, compared to 4.3% in January and 3.1% in December. Prices have increased by 3.8% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 4.8%.
  • Inflation for services (including rents) has decreased from 5.2% in January to 4.9% in February. Prices increased by 0.7% compared to the previous month. The average inflation rate of this aggregate for the last twelve months is 6.1%.

Core inflation (inflation without energy and unprocessed food) stood at 4.1% in February. This is a decrease compared to the 5.0% rate registered in January. Average core inflation over the last 12 months amounts to 6.8%. Prices of this subaggregate have increased by 1.5% compared to the previous month.

Inflation according to specific aggregates

Specific aggregates Weight (‰) Inflation on annual basis (%) 12-month average (%) Monthly change
Dec/23 Jan/24 Feb/24 Feb/24 Feb/24
Total expenditure 1.000,0 0.5 1.5 3.6 1.7 2.4
Fuels and energy sources 100,8 -28.7 -22.3 -0.2 -28.4 11.0
Processed food products 164,8 7.6 5.6 4.7 10.9 0.2
Unprocessed food 41,4 7.5 7.1 4.6 10.8 0.5
Non-energy industrial goods 256,0 3.1 4.3 2.4 4.8 3.8
Services 436,9 6.1 5.2 4.9 6.1 0.7
HICP without energy and unprocessed food (core inflation) 857,7 5.5 5.0 4.1 6.8 1.5

Effect of sub-indices on inflation

The largest upward effect on inflation was caused by domestic heating oil (0.35 percentage points). Tobacco provided a contribution of 0.34 percentage points. Restaurants and cafés had an effect of 0.20 percentage points. Rents had a positive effect of 0.16 percentage points. Finally, the maintenance and repair of vehicles had a positive effect of 0.11 percentage points.

Sub-indices with the largest upward effect on inflation

Sub-index Weight (‰) Effect on inflation (percentage point)
2024 Feb/24
04.5.3 Domestic heating oil 13.7 0.35
02.2.0 Tobacco 32.4 0.34
11.1.1 Restaurants and cafés 78.7 0.20
04.1.0 Rents 72.5 0.16
07.2.3 Maintenance and repair of vehicles 23.2 0.11

The largest downward effect on inflation came from electricity with -0.62 percentage points. Natural gas provided a downward effect of -0.14 percentage points.

Sub-indices with the largest downward effect on inflation

Sub-index Weight (‰) Effect on inflation (percentage point)
2024 Feb/24
04.5.1 Electricity 34.9 -0.62
04.5.2 Gas 20.2 -0.14

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 of February. This inflation in Belgium in February amounted to 3.6%, an increase compared to the rate of 1.5% observed in January. The Netherlands registered an inflation rate of 2.7% in February. This is a decrease compared to the 3.1% rate registered in January. Inflation in France in February amounted to 3.1%, down from 3.4% in January. The first HICP flash estimate for February in Germany was 2.7%, a decrease compared to January when it was 3.1%.

Since Eurostat has not yet published the harmonised index of consumer prices at constant tax rates of February, January is the most recent month to use as a basis for comparison. Belgium's inflation rate based on the HICP-CT stood at -1.1% in January, up from a rate of -2.0% in December. In January, this inflation in Germany was running at 2.7%, down from the rate of 3.7% registered in December. Inflation in France decreased from 4.2% in December to 3.5% in January. In the Netherlands, this inflation increased to 2.4% in January. In December, it was -0.6%.


[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 have been neutralised in the CPI , 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).

Table 1
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Inflation calculated based on harmonised index of consumer prices by group of products and services, last 12 months

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Graph
Content
Table 2
Table 3
Content

Inflation measured through harmonised index of consumer prices by specified aggregates, last 12 months

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Table 4

Purpose and brief description

The Harmonised Index of Consumer Prices (HICP) is an economic indicator designed to measure over time the price evolution of goods and services purchased by households. The HICP therefore allows for a comparable measurement of inflation in the euro area, the EU, the European Economic Area and for all other countries including candidate countries for the European Union. The HICP is calculated in a harmonised manner and on the basis of common concepts. The HICP is the official measure of inflation in the euro area to enable the European Central Bank to conduct its monetary policy.

Population

Final expenditure of households living on Belgian territory.

Frequency

Monthly.

Release calendar

Results available 15 days after the reference period

Definitions

Harmonised consumer price index (HICP): The Harmonised Index of Consumer Prices (HICP) was created in 1997 in order to have a comparable measurement of the inflation among the participating countries of the future euro area. Since the inception of the euro, the HICP has been one of the European Central Bank's (ECB) most important measuring instruments in the conduct of its monetary policy. The collected prices are those actually borne by the consumers, including for example taxes on products, such as value added tax, and take into account the sales periods.

Inflation: Inflation is defined as the ratio between the value of the consumer price index of a given month and the index of the same month the year before. Therefore, inflation measures the rhythm of the evolution of the overall price level.

COICOP; COICOP is a nomenclature, developed by the United Nations, that aims to classify individual consumption expenditures of households according to purpose.

Harmonised Index at constant tax rates: The Harmonised Index of Consumer Prices at constant tax rates is derived from the HICP and is calculated by keeping the level of indirect taxes (mainly excise duties and VAT) constant compared to the level observed in December of the previous year. This index allows measuring the maximum effect on the inflation of changes in taxes by assuming that they are directly and fully passed on to the final price paid by consumers.

Weighing: Weight in the basket of goods and services determined by the results of the national accounts (expenditure optics) and those of the household budget survey.

Inflation at constant tax rates: Inflation is defined as the ratio between the value of the consumer price index of a given month and the index of the same month the year before. Therefore, inflation measures the rhythm of the evolution of the overall price level.

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