Inflation is a process of continuous, generalised increase in the prices of goods and services for household consumption. Rising inflation refers to a situation in which the rate of price increases is accelerating, while falling inflation describes the case in which prices are rising but at a decreasing rate.
Inflation is measured through the construction of the consumer price index, that measures changes in prices of a ‘basket’ of goods and services, which is representative of households consumer expenditure in a specific year.
Istat calculates three consumer price indices:
- consumer price index for the whole nation (NIC), based on the entire present population’s consumptions;
- consumer price index for blue and white-collar worker households (FOI) based on consumptions of households whose reference person is an employee;
- harmonised index of consumer prices (HICP), calculated according to the EU regulations in force, which gives comparable measures of inflation in the euro-zone, the EU, the European Economic Area and for other countries including accession and candidate countries and is used as a key indicator for the monetary policy of the European Central Bank.