Definition of Monetary Union Index of Consumer Prices (MUICP)
The Monetary Union Index of Consumer Prices (MUICP) is an aggregate measure of consumer inflation for all countries within the eurozone. It is published monthly by Eurostat, the statistical office of the European Union (EU).
Understanding Monetary Union Index of Consumer Prices (MUICP)
The Monetary Union Index of Consumer Prices (MUICP) is calculated by taking the weighted average of the Harmonized Indices of Consumer Prices (HICPs) from each country within the eurozone (also called the euro area). Each country's HICP measures the change over time in the prices of a basket of goods and services acquired, used or paid for by households within that country. The term "harmonized" refers to the fact that all countries in the EU use the same methodology - this means that the country indices can be compared to each other, as well as aggregated to form the MUICP.
Eurostat calculates the MUICP using data provided by the national statistics agency of each member state on price changes and the consumption patterns of consumers within its economy (the baskets of consumer goods and services used in the indices are updated annually to reflect current spending patterns). Eurostat notes that the HICPs "aim to cover the full range of final consumption expenditure for all types of households in order to give a timely and relevant picture of inflation".
The weightings of each country are updated every year for the aggregate calculation of the MUICP. Each country's weight represents its share of total household final monetary consumption expenditure in the eurozone. The initial MUICP was launched in 1998 with the 11 EU states that were to become members of the eurozone when the euro currency launched on 1 January 1999. The eurozone currently encompasses 19 of the 28 EU countries. Germany has the largest weight, currently at 28% of the total MUICP.
The main goal of the European Central Bank (ECB) is price stability, which it defines as an annual HICP rate in the euro area of 2% or less. The HICP and MUICP data releases are therefore critical for the ECB in terms of how it sets monetary policy in the eurozone. MUICP is also referred to as eurozone HICP.
Eurostat also publishes the European Index of Consumer Prices (EICP), which aggregates inflation across all EU countries (both within and outside of the eurozone).