Eurozone HICP Futures

Product Snapshot: Eurozone HICP Futures
Eurozone HICP futures track annual changes in the Harmonized Index of Consumer Prices, excluding tobacco (HICP), for the Eurozone, as calculated by the European Statistical Institute (Eurostat). The price index measures the level of prices for market goods and services consumed by households in the Eurozone, 12 European Union member states that use the euro as their currency.

Eurozone HICP futures provide a way to:

• Hedge interest rate risk in the European marketplace
• Use an alternative to swaps for hedging interest rate risk and managing inflationary expectations
• Tap into the deep liquidity of the European inflation derivatives market
• Trade with large numbers of natural payers and receivers of inflation
• Hedge short term inflation risks
• Express views on monthly inflation numbers 

Things to know:

• The Eurozone HICP is an aggregate of the member states' HICPs
• Index is targeted to cover almost 99.1% per of all Eurozone household consumption
• Electronic functionality now includes implied spreads and requests for quotes
• Trades exclusively on the CME Globex electronic platform
  • 8:00 a.m. to 4:00 p.m. (London Time) Mon to Fri
  • 2:00 a m. to 10:00 a.m. (Chicago Time) Mon to Fri

The reference index for the HICP futures contract is the Harmonized Index of Consumer Prices, excluding tobacco (HICP), for the Euro-zone, as calculated by Eurostat. It measures the level of prices for market goods and services consumed by households in the Euro-zone. The Euro-zone HICP is an aggregate of the member states' HICPs. It is targeted to cover almost 99.1% per of all Euro-zone household consumption.

Harmonization refers to the fact that the same methodology and nomenclatures are adopted for the index of prices for all the countries in the Euro-zone and the European Union (or EU). This enables comparison of inflation among different member states of the EU.

Aggregation involves the use of weights which equal each country's share in the Euro-zone final household consumption. These weights are calculated every year. Annual change is facilitated due to the fact that the index is an annual chained-index. New entrants to the Euro-zone are added the same year to the HICP.

The price index measures the level of prices for market goods and services consumed by households in the Eurozone, 12 European Union member states that use the euro as their currency. The Eurozone HICP is an aggregate of the member states' HICPs. It is targeted to cover almost 99.1% per of all Eurozone household consumption.

©2008 CME Group, Inc.