8 Statistics
| (27312)
6546/06
COM(05) 539
| Draft Regulation laying down detailed rules for the implementation of Council Regulation (EC) No 2494/95 as regards the temporal coverage of price collection in the harmonised index of consumer prices.
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| Legal base | Article 285(1) EC; co-decision; QMV
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| Document originated | 17 February 2006
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| Deposited in Parliament | 24 February 2006
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| Department | Office for National Statistics
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| Basis of consideration | EM of 7 March 2006
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| Previous Committee Report | None
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
8.1 Regulation (EC) No 2494/95 provided for Harmonised Indices
of Consumer Prices (HICPs) to allow international comparisons
of consumer price inflation. They form the basis of the Monetary
Union Index of Consumer Prices used by the European Central Bank
to monitor inflation. In the UK the HICP is published as the Consumer
Prices Index (CPI).
8.2 At present the temporal coverage (time period for collection)
of HICP price collection varies widely between Member States,
from a single day to a period of several weeks.
The document
8.3 This draft Regulation would set minimum standards for price
collection, stipulating that temporal coverage of HICP shall take
place over a period of at least one working week around the centre
of the month. For products which show sharp and irregular price
changes, in particular fresh food, such as fruit and vegetables,
and energy products, price collection should be extended to more
than one week.
8.4 The Commission argues that the present differences
in price collection periods may lead to significant short-term
differences in estimated price changes for the time periods being
compared and that its proposal would improve the comparability,
reliability and relevance of HICPs.
8.5 The Commission notes that the proposal, despite
opposition from some, was endorsed by a large qualified majority
in the comitology process Statistical Programme Committee[27]
— only the UK, Ireland and Germany voted against. It also
notes that the European Central Bank issued a favourable Opinion
on the proposal.
The Government's view
8.6 The Financial Secretary to the Treasury (John
Healey) tells us that Government opposes this proposal. He says
that:
- the proposal does not address
a measurement issue relating to the European Central Bank's 12
month inflation target. Differences in collection periods may
lead to short-term differences in the estimated price changes
of the time periods compared. But they will not have a systematic
impact on the 12 month rates of change of the HICP, which is the
standard measure of comparability for the HICP and the target
inflation measure for the bank;
- the proposal would impose additional
requirements on the comparability of HICPs. It is prescriptive
about the precise method of obtaining a representative sample
of prices — an important departure from the previous focus
on the harmonisation and comparability of outputs;
- the issue of irregular or volatile
price changes is a genuine phenomenon, but it does not lead to
systematic bias within or between HICPs. The effect of this proposal
would be to smooth out and hide genuine price movements; and
- implementation of the proposal
has the potential to create substantial ongoing costs for the
Government and may, depending on the precise methodology used,
have a detrimental impact on publication schedules.
8.7 The Minister tells us that the Government will
be seeking financial support from the Commission towards implementation
costs during the first two years (this possibility is provided
for in the basic Regulation). The Office for National Statistics
is developing a methodology aimed at minimising additional costs,
probably allowing a firmer estimate of implementation costs in
early 2007.
8.8 The Minister also tells us that consideration
of the proposal in the Council's Working Group on Statistics has
seen all Member States except the UK and Ireland supporting the
proposal.
Conclusion
8.9 We note the Government has serious doubts
about the utility of this proposal. But we note also that it seems
probable that the draft Regulation will be approved by the Council,
given the opposition of only two Member States.
8.10 However, before considering the document
further we should like to known whether the Government has any
concern as to subsidiarity, similar to that expressed in relation
to the current proposal on statistical classification of economic
activities.[28]
We note also that there appears to be no reference in the document
to a formal impact assessment by the Commission of this proposed
legislation. We should like to known whether this is so and, if
so, whether what success the Government is having in pressing
for one.
8.11 Meanwhile we do not clear the document.
27 Comitology is the system of committees which oversees
the exercise by the Commission of legislative powers delegated
to it by the Council and the European Parliament. Comitology committees
are made up of representatives of the Member States and chaired
by the Commission. Back
28
See paragraph 7 in this Report. Back
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