EU-harmonised inflation diverges from CPI

The EU-harmonised inflation rate rose in May to 3.7%, compared with 3.6% in April 2012.
This is in contrast to the national consumer price inflation rate, which fell slightly to 2.9% in May, from 3.1% in April.
One of the reasons is likely to be a change in the EU methodology for the harmonised consumer price inflation rate (HICP).
The Statistical Service reported that weights are now being calculated from 2012 on the basis of national accounts data in accordance with Eurostat regulation 1114/2010.
In 2011, by contrast, the computation of the weights was mainly based on the data available by the Household Budget Survey.
It noted that the change in the methodology is expected to have an impact in 2012 on “accommodation services”, owing to an increase in the weight for this category.
The HICP rate shows that restaurants and hotels rose over the year earlier by 3.6% in May, whereas the national CPI shows this category rising by only 1.6%.
If the old methodology was used, Cystat says that the overall HICP inflation rate would have been 3.3%.