National Statistics Online - Articles - Harmonised Index of Consumer Prices: Methodological Improvements from January 2001
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Harmonised Index of Consumer Prices: Methodological Improvements from January 2001
Describes the development of the Harmonised Index of Consumer Prices (HICP) focusing on methodological developments which came into effect from January 2001.
This article describes the methodological improvements to the Harmonised Index of Consumer Prices (HICP) which came into effect from January 2001. Two new Regulations came into effect, neither of which required changes in UK practices. The first sets out the circumstances in which price reductions should be taken into the HICP: in essence, normal sale prices should be taken into account, but not end-of-line sales. The second sets out when prices should be recorded in the index; in particular, it states that the prices for services shall be entered into the index for the month in which the consumption of the service at the observed price can commence.
The article also describes the extensions to coverage of goods and services which brought hospital services, and nursing and retirement homes into the HICP for the first time. These extensions to coverage increased the proportion of UK household expenditure covered by the HICP by about 1.5 per cent. It is estimated that if these changes had been introduced one year earlier, they would have had minimal or no impact on the overall HICP although the indices for health and miscellaneous goods and services would have been higher.
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