1 / 45

An HICP for the United States

An HICP for the United States. Comparing inflation between United States and Europe Using the Methods of the European Union’s Harmonized Index of Consumer Prices Walter Lane and Mary Lynn Schmidt U.S. Bureau of Labor Statistics. Acknowledgements. The authors wish to thank :

ernst
Download Presentation

An HICP for the United States

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. An HICP for the United States Comparing inflation between United States and Europe Using the Methods of the European Union’s Harmonized Index of Consumer Prices Walter Lane and Mary Lynn Schmidt U.S. Bureau of Labor Statistics

  2. Acknowledgements The authors wish to thank : • John Greenlees for his critical review • Rob Cage, Joshua Klick and Cam Taylor for providing the expenditure weights • Lyubov Rozenthal for performing the index calculations • Susan Fleck, Mary Jablonski, Ronald Johnson, John Layng, Wodolar Lysko and Jessica Sincavage for editing. The results remain the responsibility of the authors and not the Bureau of Labor Statistics.

  3. Data • US HICP\\CPISRV3\Dcppi\Harmonized_Index_of_Consumer_Prices_&_Foreign_CPIs • EU HICP • http://epp.eurostat.cec.eu.int/portal/page?_pageid=0,1136173,0_45570701&_dad=portal&_schema=PORTAL

  4. “Experimental” BLS series • As opposed to “official” series • Produced outside regular production systems • Less than full production quality • Not produced until after the publication of corresponding official statistics • For security reasons

  5. Why HICP ? International comparability • Inflation rates • Deflated series National CPIs OK for domestic purposes • Indexation of payments Visit to EUROSTAT in 2002 • John Astin, then head of consumer prices • HICP Manual

  6. An Experimental Consumer Price Index for the United States • January 1998 forward • follows HICP methods to the extent possible • includes the rural population • expanded the CPI’s population coverage to the whole population • excludes owner-occupied housing • narrowed the CPI’s item coverage to remove owner-occupied housing • “experimental” vs. “official” BLS Statistics • produced outside of its regular production system • less than full production quality • after the publication of the corresponding official statistics • available from the authors on request

  7. Until April 2004: The“EU15”: Austria Belgium Denmark Germany Greece Finland France Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden the United Kingdom. On May 1, 2004ten additional countries The “EU25”: Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Slovakia Slovenia European Union

  8. European Monetary Union (EMU) • The “Euro-zone,” • EU15 except • Denmark • Sweden • the United Kingdom • Between 2006 and 2010:The 10 countries that joined in 2004 will • join the EMU • adopt the Euro • The European Central Bank (ECB) • Manages the Euro • Uses the HICP

  9. CPI-U • Official U.S. CPI • CPI for All Urban Consumers • 87 % of the US population • Metropolitan areas • Small urban places (“Micropolitan areas”) • Excludes • Rural: 11 % of U.S. population • Institutional population: 2 % • Prisoners • Nursing home residents • Military living on bases

  10. CPI-XR • Experimental index for the (non-institutional)ruralpopulation • Jan 02 onward • 13 % of the US pop • 11 % of spending • Weights • from Consumer Expenditure Surveys • for rural population • Price movement • from small urban areas

  11. CPI-XT • Experimental index for (non-institutional)totalpopulation • Jan 02 onward • 98 % of the US population CPI-XT = CPI-U + CPI-XR

  12. U vs. XR vs. XT: Dec 01 to Dec 05

  13. US HICP • Removed weights for: • Owners’ equivalent rent of primary residence • Owners’ equivalent rent of secondary residences(part of the Lodging while out of town stratum) • Restored the weights of • Home maintenance and repairs • appliance purchases and repairs

  14. Biennial Weights (Relative Importances) for CPI-U, CPI-XR, CPI-XT and HICP 2001-2002

  15. Other Differences Between European and US Methods • geometric formula for most US elementary aggregates • tends to rise more slowly than Dutot(HICP allows either Dutot or Jevons formula) • quality adjustments for changes in consumer products • introduce new products • differences in the public/private divide • Medical care • Education Have much larger importance in the US indexes • Household and vehicle insurance • Europe: premiums-net-of-reimbursements • US: gross premiums (net reimbursements from expenditures)

  16. CPI-U vs. HICP : Dec 97 to Dec 05

  17. Harmonized index of consumer prices for selected countries and areas, • percent change from same period of previous year, 2003-2006 • ------------------------------------------------------------------------------------------------------------- • United European European United • Period States Japan Union-25 Union-15 France Germany Italy Kingdom • (1) (2) (3) • ------------------------------------------------------------------------------------------------------------- • 2003 2.3 -0.3 1.9 2.0 2.2 1.0 2.8 1.4 • 2004 2.8 0.0 2.1 2.0 2.3 1.8 2.2 1.3 • I 1.7 -0.1 1.7 1.7 2.0 1.0 2.3 1.3 • II 3.0 -0.4 2.3 2.3 2.6 1.9 2.3 1.4 • III 2.8 -0.1 2.3 2.3 2.4 2.0 2.3 1.3 • IV 3.7 0.6 2.3 2.3 2.3 2.2 2.2 1.4 • 2005 3.9 -0.4 2.2 2.1 1.9 1.9 2.2 2.0 • I 3.2 -0.1 2.1 2.1 1.9 1.7 2.0 1.7 • II 3.3 -0.1 2.0 2.0 1.8 1.6 2.2 1.9 • III 4.6 -0.4 2.3 2.3 2.1 2.1 2.2 2.4 • IV 4.3 -0.8 2.3 2.3 1.8 2.2 2.4 2.1 • Sep 5.9 -0.5 2.5 2.5 2.4 2.5 2.2 2.4 • Oct 5.3 -0.9 2.4 2.4 2.0 2.3 2.6 2.3 • Nov 3.9 -1.0 2.3 2.3 1.8 2.2 2.4 2.1 • Dec 3.8 -0.4 2.1 2.2 1.8 2.1 2.1 1.9 • 2006 • Jan 4.5 0.5 2.2ep 2.3ep 2.3 2.1 2.2 1.9 • Feb 4.0 0.4 2.2ep 2.2ep 2.0 2.1 2.2 • ------------------------------------------------------------------------------------------------ • e: estimated p: provisional • (1) The figures for Japan refer to the CPI which covers the entire country. They are adjusted to exclude owner-occupied housing. • (2) European Union-25 (EU-25) refers to European Union memeber countries as of May 1, 2004. The EU-25 index is the household expediture-weighted average for Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. • (3) European Union-15 (EU-15) refers to the European Union members prior to the expansion of the European Union countries on May 1, 2004. The EU-15 index is the household expenditure-weighted average for Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. • NOTE: These percent changes are based on national harmonized indexes of consumer prices (HICP) as published by each country and Eurostat. The HICP is the standard price index that members of the European Union must produce. The index covers the entire population of a country and excludes owner-occupied housing. The data have not been otherwise adjusted for comparability. National differences exist, for example, with respect to the frequency of market basket weight changes. • The BLS uses the term "experimental" for the U.S. HICP to denote that the series is produced outside of regular production systems and, consequently, with less than full production quality. • For more information see "Comparing inflation between United States and Europe Using the Methods of the European Union's Harmonized Index of Consumer Prices" by Walter Lane and Mary Lynn Schmidt at <link> • PREPARED BY: U.S. Department of Labor, Bureau of Labor Statistics, April 7, 2006.

  18. 01 Food and non-alcoholic beverages 02 Alcoholic beverages, tobacco and narcotics 03 Clothing and footwear 04 Housing, water, electricity, gas and other fuels 05 Furnishings, household equipment and routine maintenance of the house 06 Health 07 Transportation 08 Communication 09 Recreation 10 Education 11 Hotels, cafes and restaurants 12 Miscellaneous goods and services Two-DigitClassification of IndividualConsumption by Purpose 20

  19. Legal services Funeral expenses Financial services Motor vehicle insurance Jewelry and watches Personal care products Personal care services Household paper products What’s in USH12? 21

  20. Expenditure weights, selected countries, two-digit level 22

  21. Expenditure weights, selected countries, two-digit level 23

  22. US EU25 All Items 19.2% 16.6% 02 Alcohol and tobacco 38.3% 31.6% 04 Housing 36.9% 27.1% 06 Health 32.7% 27.3% 07 Transportation 21.4% 24.1% 10 Education 50.9% 32.8% 12 Miscellaneous goods 23.0% 30.0% and services Compare Price Change, EU25 and US HICP sub indexes, Dec 98 to 2005 24

  23. Comparison: all items, selected countries, Dec 1998-2005 25

  24. 12-month change selected countries, December 1998-2005 26

  25. Selected comparisons of two-digit indexes RI EU25 USH 02 44.8 19.2 RI EU25 USH 04 145.7 134.2 27

  26. Selected comparisons of two-digit indexes RI EU25 USH 06 38.4 78.5 RI EU25 USH 10 11.1 31.9 28

  27. Selected comparisons of two-digit indexes RI EU25 USH 07 149.9 202.6 RI EU25 USH 12 86.5 92.2 29

  28. EU25 selected 2-digit indexes, Dec 1998-2005 Alcohol and tobacco Alcohol and tobacco Transport 30

  29. US HICP selected 2-digit indexes, Dec 1998-2005 Education Transportation 31

  30. US HICP 2-digit indexes, Dec 1997-2005 32

  31. US HICP 2-digit indexes, Dec 1997-2005 Education Housing Transportation 33

  32. Alcohol and tobacco, selected countries, Dec 1998-2005 France US 34

  33. Education, selected countries, Dec 1998-2005 US Sweden 35

  34. Expenditure weights, selected countries, two-digit level 36

  35. Classification Of Individual COnsumption by Purpose (COICOP): 2-digit level US HICP, EU25, and selected countries Comparison: All items Selected Major Groups/Divisions Expenditure weights / relative importances Background highlights 37

  36. Classification Of Individual COnsumption by Purpose (COICOP): 2-digit level US HICP, EU25, and selected countries Comparison: All items Selected Major Groups/Divisions Expenditure weights / relative importances Background highlights 38

  37. Classification Of Individual COnsumption by Purpose (COICOP): 2-digit level US HICP, EU25, and selected countries Comparison: All items Selected Major Groups/Divisions Expenditure weights / relative importances Background highlights 41

  38. Expenditure weights, selected countries, two-digit level 42

  39. Dec. 1997 through Dec. 2005percent change

More Related