The European Central Bank has published a Statistics Paper proposing methodological refinements to its domestic and Supercore inflation indicators following the 2026 reclassification of Harmonised Index of Consumer Prices items. For domestic inflation, the paper recommends lowering the import-content threshold from 18% to 12%, limiting the measure to items excluding energy and food, and using a constant composition based on average import shares over the latest five available years. The revised domestic measure uses updated FIGARO data through 2023 and covers 53 of 118 eligible items, representing 56.5% of the Harmonised Index of Consumer Prices excluding energy and food. For Supercore inflation, the preferred approach identifies cyclical items through a positive and statistically significant relationship with the unemployment gap, while controlling for import prices. It selects 29 items representing 37.5% of the eligible basket and raises correlation with the business cycle to 0.76 from 0.61 under the previous measure, although its pre-pandemic forecasting performance is weaker.
2026-08-20European Central Bank
European Central Bank paper proposes refined domestic and Supercore inflation measures, lowers import threshold to 12%
A European Central Bank paper proposes updated domestic and Supercore inflation measures following the 2026 consumer-price classification change. It lowers the domestic inflation import threshold from 18% to 12% and favors an unemployment-gap methodology for Supercore inflation. The revised measures cover 56.5% and 37.5% of the core inflation basket, respectively.