The HICP indicator is mainly used by the EU member states and is the most important indicator for price stability. It is based on a unified, harmonized methodology. Thus, the successful introduction of this indicator in Georgia is of high importance in terms of convergence with the EU standards.

The calculation of Harmonized Index of Consumer Prices (HICP) is based on the methodological guidelines and legislation developed by the European Union, the strict observance of which is mandatory for all countries producing this indicator.

HICP is distinguished from the Consumer Price Index (CPI) by several methodological features, mainly in terms of consumer basket weights and the classification used. In particular, in case of HICP, the expenditures of both residents and non-residents incurred within the country are used to calculate the consumer basket weight, whereas for the CPI only the expenditures incurred by the residents are used, incurred both within the country and abroad. As for the classification, the European version of the “Classification of Individual Consumption According to Purpose” (ECOICOP) is used for the HICP, which is slightly different from the COICOP, currently in force at the international level.

It should be also pointed out that HICP will not replace the existing Consumer Price Index, which is still used to calculate the inflation rate. Harmonized Index is an additional analytical indicator and will be used to ensure international comparability.