Inflation in France: CPI or HICP ?

Inflation en France: IPC ou IPCH ?

François Geerolf

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Abstract: This article examines the methodological differences between the two inflation indices published by the French National Statistical Institute (Insee): the national Consumer Price Index (CPI, IPC), used for domestic indexation purposes, and the Harmonised Index of Consumer Prices (HICP, IPCH), used at the European level. It shows that these differences are neither minor nor purely technical, but instead lead to systematic discrepancies in the measurement of inflation in France. In particular, the treatment of healthcare expenditures -based on gross prices before reimbursements in the CPI, unlike the net-of-reimbursement approach used in the HICP - results in a structural understatement of the inflation actually borne by households. Additional methodological differences, including private school fees, public broadcasting licence fee or gambling, further contribute to the observed gaps between the two indices. The article argues that, in the French case, the HICP is more consistent with international statistical recommendations and better suited for measuring purchasing power and real incomes, for example to measure rates of change "in constant euros".

Keywords: Purchasing power; Price index methodology; France; Consumer Price Index (CPI); Inflation measurement; Harmonised Index of Consumer Prices (HICP); Méthodologie des indices de prix; Pouvoir d’achat; Indice des prix à la consommation harmonisé (IPCH); Indice des prix à la consommation (IPC); Mesure de l’inflation (search for similar items in EconPapers)
Date: 2024-07-09
New Economics Papers: this item is included in nep-eec and nep-mon
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Published in 2024

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Working Paper: Inflation in France: CPI or HICP ? (2024)
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