International Comparisons of Harmonized Indexes of Consumer Prices

Beginning of article

In October 2006, the Bureau of Labor Statistics (BLS, the Bureau) introduced a new table to its Web site. The new table, "Harmonized index of consumer prices for selected countries and areas, percent change from same period of previous year, 2003-06," uses the methods of the European Union's Harmonized Index of Consumer Prices (HICP) to compare inflation rates of all G7 countries except Canada? q-he table also displays data for two transnational aggregates, one for the European Union (EU) and the other for the Euro area. (2) The table, which is available at http://www.bls. gov/fls/home.htm, will be updated monthly on the same schedule as the BES Employment Situation news release, which typically is issued on the first Friday of each month. (3) These harmonized indexes provide a better basis for international comparisons of inflation than the national CPI data published by each country.

Background

For many years, the Bureau has produced a monthly table showing the national Consumer Price Indexes (CPI's) for nine countries. The table contains percent changes as the national statistical agencies publish them. (4) Because each country produces its CPI with its own unique methods and concepts, the data presented in the table are not strictly comparable. The Bureau will continue to publish this table, in part because it covers additional countries.

The HICP is an internationally comparable measure of consumer price inflation. (5) The EU's statistical agency, Eurostat, developed the HICP's methods. The EU requires member countries and prospective member countries to produce an HICP. Most EU countries continue to produce their national CPI's for internal and historical purposes. (6) The growth of the EU and the integration of much of the European economy …