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Owner-occupied housing and inflation measurement

Martin Eiglsperger, Rodolfo Arioli, Bernhard Goldhammer, Eduardo Gonçalves and Omiros Kouvavas ()

Economic Bulletin Articles, 2022, vol. 1

Abstract: The ECB’s monetary policy strategy review confirmed that the Harmonised Index of Consumer Prices (HICP) remains the appropriate price measure for assessing the achievement of the medium-term price stability objective. However, the Governing Council recognised that the inclusion of costs related to owner-occupied housing in the HICP would better represent the inflation rate that is relevant for households. This article elaborates on the topic of owner-occupied housing and its proposed inclusion in the HICP. It showcases the two options considered by the Governing Council, focusing on their statistical and conceptual properties. For the net acquisition approach recommended by the Governing Council, the article presents analytical indices based on ECB approximations that serve as a blueprint for the quarterly internal measure to be monitored. Finally, the article looks ahead to the incorporation of the costs of owner-occupied housing into the HICP and the associated challenges, noting that the current HICP will remain the main reference index for monetary policy during the transition period. JEL Classification: C43, E31, E51

Keywords: Euro area; Inflation; Owner-Occupied Housing (search for similar items in EconPapers)
Date: 2022-02
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