A consumer price index, or CPI, is a statistical indication of how much money people would need to spend to maintain the same level of consumption over time. It compares the prices of goods and services on which a typical household spends money—such as food, transport, clothing, health care and household items— with the prices of those things a year ago. An increase in these prices, and therefore in the index, is known as inflation.

The CPI increased around 2 per cent in many of the larger UNECE economies during 2018, relative to the same period in the previous year. In most UNECE countries consumer prices increased between 0.5 per cent and 4 per cent.

Germany, Spain and Poland, and to a lesser extent the United Kingdom, are representative examples of the overall development across the countries of the European Union (EU), where in 2015 and 2016 very low and partly negative inflation rates (deflation) were a concern for many countries. By the end of 2016, most countries in the EU and in the Eurozone had moved to a higher inflation rate, fulfilling the European Central Bank’s target for the Eurozone of below, but close to, 2 per cent over the medium term.

Over the same period the United States experienced a similar development of the inflation rate to that seen in the EU, but as in the United Kingdom it saw an earlier recovery of inflation rates, starting in late 2015. However, the recovery in the United Kingdom and the United States was not as sudden as in the other countries, and inflation remained at around 1 per cent throughout most of 2016 in both countries.

In general, in the UNECE region, inflation of around 2 per cent is considered low and stable—a good thing to aim for. When it is higher, planning becomes difficult for businesses and individuals, and when it’s lower, people may reduce their spending in the hope of continued falls in prices.