Not the law itself: Notice

Address https://gelex.eu/eli/EU/notice/oj/C/2015/175/02@2015-03-13/en

Contents

1. Preamble

On 17 December 2014, the European Central Bank (ECB) received a request from the European Parliament for an opinion on a proposal for a Regulation of the European Parliament and of the Council on harmonised indices of consumer prices (HICP) (hereinafter the proposed regulation). This legal act would repeal and replace Council Regulation (EC) No 2494/95. On 26 January 2015, the ECB was consulted on the same proposal by the Council of the European Union. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union. The proposed regulation lies within the ECB’s fields of competence as the ECB is a key user of HICP statistics. Harmonised indices of consumer prices are important indicators in the context of monetary policy. They are of crucial importance to the ECB’s primary objective of maintaining price stability in the euro area, as sound monetary policy decisions depend on reliable and high quality HICP statistics. They also support the Eurosystem’s tasks in the area of financial market stability. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. General observations The ECB supports the efforts undertaken by the European Commission (Eurostat) concerning the review and modernisation of the Union legal framework for compilation of HICP statistics. Consultation of the ECB and its involvement in the preparatory and implementing work Given the ECB’s consistent contributions to the HICP framework and the importance of high quality HICP statistics for sound monetary policy and, in particular, for the pursuit of the ECB’s primary objective of price stability, the ECB should continue to be consulted on future modifications of this framework. In particular, pursuant to Articles 127(4) and 282(5) of the Treaty, the ECB is to be consulted on any implementing and delegated acts, which the Commission may adopt under the revised legal framework for the HICP. The obligation to consult, and the benefits of ECB consultation, were underlined by the European Court of Justice in Commission v ECB. Consistent with the existing provisions of Regulation (EC) No 2494/95, and notwithstanding the collaboration in the preparation of legislative acts, Recital 2 of the proposed regulation should reflect the ECB’s competence to be consulted on implementing and delegated acts adopted under the proposed regulation. Use of delegated and implementing acts Regarding the Commission’s power to adopt delegated acts based on Article 290 of the Treaty, the ECB considers the threshold below which there is no obligation for Member States to provide sub-indices of harmonised indices, and the list of sub-indices that need not be produced by Member States to be essential elements of the proposed regulation. These items are fundamental to ensure sound and harmonised consumer price indices. Changes to these parameters have a direct effect on the coverage and on the soundness of the indices. They exert a significant influence on the index quality and reliability. The ECB therefore considers that delegated acts are not the appropriate legal instruments to be used to establish rules governing these key elements of the HICP framework. These issues should be decided and laid down in the proposed regulation. The ECB suggests incorporating in Article 5(6) and (7) the well established thresholds of 1/1000 weight of the total expenditure covered by the HICP, and 1/100 for owner-occupied housing and house price indices, respectively. The ECB supports the proposed Article 5(1) in connection with Article 2(q) on the collection of information about administered prices as part of the basic information that should be provided with reference to HICPs (and HICPs at constant tax rates). The ECB monitors price developments that are either set directly, or influenced to a significant extent, by the government (at central, regional or local level, including national regulators), as well as the impact of these developments on the overall HICP. Indeed, this information is very useful for the analysis of inflation developments. However, further guidance is necessary with regard to the classification of prices as either not, mainly or fully administered. This classification is often ambiguous. For indices that refer to, or exclude administered prices, the ECB would welcome if the Commission would provide guidance ensuring the harmonised definition and application of these concepts in an implementing act adopted under Article 4(4) of the proposed regulation. Methodological issues The ECB agrees with the Commission that the new legal framework should not fall behind the current requirements for compiling harmonised indices in terms of quality and consistency assurance. The achievements reached in the past 20 years since the adoption of Regulation (EC) No 2494/95 should be maintained and, where possible, enhanced. Article 4(2)(b) of the proposed regulation introduces a wider margin for systematic differences in annual growth rates of the owner-occupied housing price index (OOH-price index) and of the house price index (HPI) that may result from deviations from the concepts or methods laid down in the proposed Regulation. While Commission Regulation (EU) No 93/2013 is silent on this issue, the ECB strongly suggests applying the standard of 0,1 percentage points that is used for assessing the comparability of sub-indices of the HICP. This could be achieved by dropping Article 4(2)(b) of the proposed Regulation and removing the restriction in the coverage of Article 4(2)(a). Relaxing comparability requirements would deteriorate the quality of the OOH and HPI sub-indices. The production of sub-indices at intervals less frequent than required by the proposed regulation should remain subject to prior approval by the Commission (Eurostat). This is currently ensured by Article 8(2) of Council Regulation (EC) No 2494/95. The same requirement should be reflected in Article 6(3) of the proposed regulation, as well as in the implementing regulation. Where the ECB recommends that the proposed regulation be amended, specific drafting proposals are set out in a technical working document accompanied by explanatory text to this effect. Done at Frankfurt am Main, 13 March 2015. The President of the ECB Mario Draghi

Versions

1. 2015-03-13