The dynamics of inflation components and their comparability among countries: the case of the HICP

The paper presents a method to classify the dynamic patterns of the whole set of sub-indices that make up the harmonised index of consumer prices (HICP) and to assess the comparability of the national series referred to a same elementary aggregate of the target consumption expenditure. We consider more than 1.200 series in the period 2004-2008,referred to nearly 100 elementary aggregates and 14 EU countries. Based on the values assumed by a set of variability indicators compiled for each series, we explore the outcomes of a classification of sub-indices obtained through the sequential use of principal components and hierarchical clustering. From a measurement of the degree of heterogeneity of the series within each elementary aggregate, we derive a list of the most problematic aggregates which possibly deserve further methodological harmonisation in order to provide comparable estimates. Three distinct case studies are more thoroughly analysed and discussed: air transport, package holidays and electricity.