What is this data used for and why is it important?

The HICP was set up to provide a high-quality measure of consumer price inflation, comparable across countries. It is used:

• by the European System of Central Banks in order to measure the achievement of the price stability objective under Article 127(1) of the Treaty on the Functioning of the European Union, which is of particular relevance for the definition and implementation of the monetary policy. The European Central Bank defined 'price stability' as a year-on-year increase in the HICP for the euro area of below 2%. In the pursuit of price stability, the European Central Bank aims at maintaining inflation rates below, but close to, 2% over the medium term;
• to assess price convergence with a view to a country's joining the monetary union;
• in the context of the Commission's macroeconomic imbalance procedure as established by Regulation (EU) No 1176/20111 and for public policy in the EU.

In addition to these specific EU purposes, it may be used, like other consumer price indices, for economic analysis as well as for indexing commercial contracts, wages, social protection benefits or financial instruments.