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Harmonised Index of Consumer Prices (HICP)
From the Collaborative Bond and Money Market Data Portal
Defintition: The Harmonised Index of Consumer Prices (HICP) is a set of consumer price indices (CPIs) calculated according to a harmonised approach and a single set of definitions, used primarily to measure inflation in the European Union (EU) and euro area. It provides the best statistical basis for international comparisons of consumer price inflation.
Core Definition and Purpose
  • Definition: The HICP measures the change over time in the prices of consumer goods and services acquired, used, or paid for by households.
  • Purpose: It is used by the European Central Bank (ECB) to define and monitor price stability (aiming for below 2% over the medium term) and to assess inflation convergence for countries joining the Euro.
  • Coverage: It covers the "household final monetary consumption expenditure" including goods and services (food, clothing, health, transport, telecommunications, etc.).

Data Model: In the CMDportal Collaborative Bond and Money Market Data Model, HICP is used as a reference indicator supporting inflation-linked securities and coupon type attributes.

Effects on bond and money markets:

  • HICP inflation data influences ECB interest-rate expectations, directly affecting government bond yields and short-term money-market rates.

  • Higher HICP readings typically lead to rising yields and lower bond prices, while supporting demand for inflation-linked securities.

  • HICP releases act as key market signals for pricing, liquidity conditions, and yield-curve positioning across fixed-income markets.

Regulatory and market-structure implications:

  • HICP serves as the primary inflation benchmark for ECB monetary policy, shaping regulated funding and benchmark interest rates.

  • Supports risk modelling, valuation, and regulatory reporting across EU bond and money-market participants.

  • Harmonised methodology enables cross-border comparability and ESG/Green EU classification within market data frameworks such as CMDportal.





Related Terms
Inflation, Inflation Linked Bonds