Charting International Labor Comparisons
Section 4: Consumer prices
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- Chart 4.1 - Measures of consumer price inflation, selected countries, average annual percent changes, 2007–2009
- Chart 4.2 - Harmonized indexes of consumer prices, selected countries, average annual percent changes, 2000–2007 and 2007–2009
- Chart 4.3 - Manufacturing compensation and consumer price indexes, selected countries, average annual growth rates, 2007–2009
- Chart 4.4 - Price of a basket of goods that costs one dollar in the United States, selected countries, 2009
- Notes - Sources and definitions
Consumer price indexes (CPI) and
harmonized indexes of consumer
prices (HICP) measure the change
over time in the prices paid by
consumers for a fixed selection, or
market basket, of goods and services.
Price indexes are used primarily to adjust
income payments for changes in the cost
of living and to compute inflation-adjusted
measures of other economic series.
- The two inflation rates were identical in 8 countries, and the difference between the two rates was greater than half a percentage point in just 5 of the 23 countries.
- Ireland was the only country showing opposite trends between the two inflation rates, and the largest difference between the two rates was in the United Kingdom. The differing trends reflect differences in the market basket that is covered by the HICP and CPI for these countries.
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- Harmonized indexes of consumer prices (HICP) are an internationally comparable measure of consumer price inflation.
- For a majority of countries—particularly Slovakia, Ireland, and Portugal—inflation was slower during the 2007 to 2009 period, when economies worldwide experienced recessionary pressures.
- Eastern European countries generally had the highest rates of inflation during both periods, while prices changed the least in Japan.
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- The gap between the growth rates for hourly compensation costs and the consumer price indexes (CPI) indicates the degree to which manufacturing worker compensation has kept up with inflation.
- Compensation growth outpaced inflation in most countries between 2007 and 2009. The compensation-inflation gap was largest in Ireland, Slovakia, and Brazil.
- Compensation growth rates lagged inflation in Taiwan, the Republic of Korea, Canada, the Philippines, and Hungary.
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- Low prices relative to the United States were found in Southern and Eastern Europe, Latin America, and East Asia. The cheapest basket of goods was in China.
- The price of foreign goods and services compared with their price in the United States is known as the relative price. A value higher (lower) than 1 indicates that prices in a particular country are higher (lower) than prices in the United States.
- Countries with high relative prices included countries in Northern and Western Europe, as well as Japan, Canada, and Australia.
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Consumer price indexes (CPI) and harmonized
indexes of consumer prices (HICP) for most
countries are from the BLS report
International Indexes of Consumer Prices 18 countries and areas, 1996-2009.
Data for the remaining countries are
based on data from the Organisation for Economic
Co-operation and Development (OECD) database
OECD.Stat, the European Commission database
and national statistical offices (for the
Philippines, Singapore, and Taiwan).
Each country produces its own consumer price index
using unique methods and concepts. For this reason,
CPI data are not fully comparable across countries.
Differences exist mainly in population coverage,
frequency of market basket weight changes, and
treatment of homeowner costs.
The HICP is an internationally comparable measure
of consumer price inflation. The HICP is the
standard price index that European Union member
states must produce for comparisons across
countries. HICP data for the United States are an
experimental BLS series. Although the HICP series
for the United States broadly follows the European
Union definitions, some differences remain in
the frequency of market basket weight changes,
aggregation methods, and quality adjustments.
Relative prices for most countries are from the BLS
International Comparisons of GDP per Capita
and per Hour, 1960–2009. Data for the remaining
countries are based on PPP from OECD.Stat and
the World Bank database
World Development Indicators, and on market exchange rates from the
U.S. Federal Reserve, the International Monetary
Fund’s International Financial Statistics publication,
The relationship between purchasing power parities
(PPP) and market exchange rates can be used to
estimate comparative, or relative, prices of goods
and services in different countries. Relative prices
are calculated by dividing PPP by market exchange
rates. The resulting values indicate the domestic
price, expressed in U.S. dollars, of a basket of goods
that would cost exactly one dollar in the United
States. Consequently, values less than 1 indicate that
prices in that country are relatively low, compared
with the United States. Values greater than 1 indicate
that prices in a particular country are relatively high,
compared with the United States.
Compensation costs refer to average hourly
compensation costs for all employees in
manufacturing. (See section 3 Notes.) Consumer price
indexes (CPI) are a measure of the average change
over time in the prices paid by consumers for a
market basket of consumer goods and services. CPI
and annual percent changes are based on national
CPI as published by each country. They have not
been adjusted for comparability. Harmonized indexes
of consumer prices (HICP) are an internationally
comparable measure of consumer price inflation
based on European Union definitions. The index
represents urban and rural households in each
country and excludes the component for owneroccupied
housing costs. Purchasing power parities
(PPP) are currency conversion rates that allow output
in different currency units to be expressed in a
common unit of value. A PPP is the ratio between
the number of units of a country’s currency and
the number of U.S. dollars required to purchase an
equivalent market basket of goods and services
within each respective country.
Last Modified Date: August 2, 2011