Explanatory Memorandum to COM(2014)724 - Harmonised indices of consumer prices - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2014)724 - Harmonised indices of consumer prices. |
|---|---|
| source | COM(2014)724  |
| date | 09-12-2014 |
The European Commission and the European Central Bank require inflation measures in the EU to be harmonised in order to ensure the good functioning of the European Union, and in particular to implement effective monetary policy.
Harmonised consumer price indices are essential for assessing and measuring:
· convergence in terms of price stability within the EU; and
· the results of euro area monetary policy, in terms of achieving the objective of price stability.
Harmonised inflation measures are also used for assessing national competitiveness as part of the Commission’s macroeconomic imbalance procedure.
For these purposes, consumer price indices need to be comparable across all countries and all product areas. They must be sufficiently detailed and be able to be produced within a reasonable timeframe. The inflation figures calculated from consumer price indices must constitute an objective and unbiased basis for decision making.
In addition, comparable and reliable consumer price indices are, together with other sources, a valuable input for deflating economic values such as salaries, rents, interest rates and National Accounts data. These estimated volume time series show the evolution of a given economic phenomenon without the impact of inflation and are an essential input for political and economic decisions.
In October 1995, a Council Regulation on harmonised indices of consumer prices (HICP) was drafted and adopted, followed by 20 implementing regulations in the following 17 years.
Standardised rules ensuring maximum comparability remain important for the main users of HICP, in particular the Commission and the European Central Bank, but certain parameters have changed since the adoption of the original framework:
· The development of the European Statistical System (ESS) has led to a much greater acceptance of the need for a harmonised approach to many of the methodological aspects relating to consumer price indices.
· The technical aspects of data collection and index compilation have changed dramatically due to the rapid rate of technological progress in recent years. Powerful information technology systems make it possible to adopt methods that would not have been considered as little as two decades ago: the advent of scanner data is revolutionising data collection practices and the use of various internet sources for prices is constantly developing.
· The Lisbon Treaty established a new comitology set-up, introducing delegated and implementing acts. This needs to be reflected in the legal framework.
These various changes all necessitate redrafting of the legislation on HICP so as to modernise and rationalise the legal basis and adapt it to today’s needs, both actual and potential. Reviewing the HICP Regulation gives stakeholders the chance to reflect on the existing rules and recommendations, to rationalise them and to focus on particular aspects according to their current relevance and the best interests of various types of users.
Many policy areas in which the EU plays an active role require information on events and developments affecting consumer price indices so that operational objectives can be formulated and progress evaluated. EU legislation also requires Eurostat to provide deflators of the highest possible quality, for which HICP are a valuable input. The indices must be timely, accurate, complete, coherent and comparable at EU level and between different product groups. Only by modernising the European legislation on HICP can these requirements be met.
The proposed HICP Regulation enshrines the principles of the European Statistics Code of Practice relating to commitment to quality, sound methodology, cost-effectiveness, relevance, accuracy, reliability, coherence and comparability.
WITH INTERESTED PARTIES AND IMPACT ASSESSMENTS
The draft HICP Regulation was discussed by expert groups made up of both producers of statistics, in particular national statistical institutes, and users of statistics, including the European Commission, the European Central Bank and national central banks. The European Statistical System Committee was consulted.
An impact assessment was not deemed necessary.
The objective of this proposal is to establish a common legal framework for the production of harmonised indices by Member States, which involves collecting, compiling, processing and submitting harmonised consumer price indices. These are necessary for the systematic production of inflation measures in the European Union.
This proposal simplifies and clarifies the requirements for the compilation of these indices. In particular, it:
· provides a new general framework applying to well-defined categories of product groups;
· establishes a clear and well-defined scope of application;
· maintains specific measures for specific domains such as health, education, social protection and insurance;
· addresses possible differences in interpretation and difficulties for data suppliers in applying the rules;
· ensures that similar product groups are treated in the same way across the EU;
· eliminates provisions that have become redundant; and
· clarifies provisions that have led to misinterpretations in the past.
Where further specification or uniform conditions for implementation are needed, the Regulation provides for the possibility of adopting delegated or implementing acts in accordance with Articles 290 and 291 of the Treaty on the Functioning of the European Union (TFEU).
In particular, in order to ensure full comparability of consumer price indices, uniform conditions are needed for:
· the breakdown of HICP by European classification of individual consumption according to purpose (ECOICOP) categories;
· the methodology used in producing harmonised indices;
· the meaning and use of statistical units;
· the weights used in calculating harmonised indices and metadata on the weights;
· the annual calendar for transmitting harmonised indices and sub-indices;
· data and metadata exchange standards;
· conditions for revising data;
· basic information and methods to be used, based on the evaluation of pilot studies; and
· technical quality assurance requirements relating to the content of annual quality reports, the deadline for providing these reports to Eurostat and the structure of the inventory.
In accordance with Article 291 of the TFEU, the proposed Regulation therefore confers implementing powers on the Commission.
In accordance with Article 290 of the TFEU, the proposed Regulation delegates to the Commission the power to adopt non-legislative acts of general application to supplement or amend non-essential parts of the Regulation. This will allow the Commission to:
· ensure comparability at international level of the classification of individual consumption according to purpose (COICOP) used for the breakdown of HICP;
· establish a threshold below which there is no obligation to provide sub-indices of harmonised indices; and
· establish a list of sub-indices that Member States are not obliged to produce.
The Commission should ensure that these delegated acts do not impose a significant additional administrative burden on Members States.
The proposal for a revised HICP Regulation seeks to create a single legal measure covering all uniform conditions. There are currently 20 different implementing regulations. Under the new Regulation these would be combined into a single one, which would give stakeholders and Member States greater clarity and make administration easier and more effective. Simplifying requirements and their implementation in this way is one of the main objectives of the proposed strategy for a new legal framework for HICP.
None for the EU budget.