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Britain and France are among the countries with the strongest reductions in consumer prices from December last year to January this year. In Britain, prices declined 0.7 per cent, in France 0.4 per cent. Britain has previously had price declines in this period, but not as strong. On the other hand, France has had modest increases during this period in previous years.
The harmonized consumer price index for the EU region was 102.2 (1996=100) in January 1998. This is a decline of 0.2 per cent from December 1997. During the same period in 1996 and 1997 the index increased 0.2 per cent.
In Norway the harmonized consumer price index (HCPI) rose 0.5 per cent from December 1997 to January 1998. Despite the modest growth this is the highest price increase in the EEA region. During the same time last year the increase for Norway was 1.1 per cent.
Small differences in the Nordic countries
The increase in the Norwegian HCPI from January 1997 to January 1998 (the 12-month growth rate) was 1.6 per cent. The other Nordic countries also had relatively low price inflation, with 12-month rates between 1.6 and 2.2 per cent. The prices that are rising the fastest in Sweden, Iceland and Norway are those of tobacco and alcohol. Another common feature of these countries is that the prices of clothing and shoes are lower in January 1998 than one year ago. This is also true of Denmark.
Several countries in Southern Europe also have relatively high price inflation on alcohol and tobacco, while France has announced an increase in tobacco prices. All countries in Southern Europe have reduced the 12-month growth rate in comparison to 1996. The decline in Italy is because of the higher value of the Italian lira, which in turn has led to lower prices on imported goods.
Membership in the EU's Economic and Monetary Union (EMU)
Under the Maastricht treaty, an EMU member country must meet the following criteria: Inflation, measured by the change in the HCPI, must not be more than 1.5 per cent higher than the average for the three counties with the lowest inflation. As of January 1998 this means that inflation cannot be over 2.1 per cent, if the last known 12-month growth rate is used. All EU countries, with the exception of Greece, satisfy this requirement. Based on an overall assessment, the EU will decide at its summit meeting in early May which countries will qualify for participation in the EMU process.
Weekly Bulletin issue no. 11, 1998