CPI basket adjusted to current consumption pattern

The new inflation series published today by Statistics Netherlands is based on a revised basket of goods and services. The consumer price index (CPI) measures price developments of a selection of goods and services, relative to the base year. The composition of the basket is based on the average consumption pattern of Dutch households. As consumption patterns tend to shift in the course of time, the composition of the basket requires regular evaluation and adjustment. Today, the composition of the basket, reflecting the consumption pattern of the year 2000, has been replaced by an updated version, based on the 2006 spending pattern.

Shifts in consumption pattern

The most significant changes in the CPI basket refer to housing and energy costs. Energy prices and costs of housing have risen substantially and this development is reflected in the CPI basket.

Share of spending on goods and services included in the CPI, 2006

Share of spending on goods and services included in the CPI, 2006

The share of mobile telephone services, Internet services and other forms of telecommunication has also increased distinctly over the past six years. Households spent less money on clothes, because price increases for clothes remained below the inflation rate. 
Dutch households also spent less on transport than in 2000, due to declining car sales. The share of petrol remained more or less the same.

Dutch households spent less on recreation and culture. Due to price cuts, consumers spent less money on audio and photo equipment and computer hard and software. The price of CDs also dropped dramatically and book and newspaper sales declined.

The new health care system

The introduction of the new health care system affects the composition of the CPI basket. The weights of health and various goods and services increase, because the new series includes all medical care not covered by the basic health insurance, including premiums for supplementary insurances.

Annual adjustments of the CPI basket

With the introduction of the revised basket, the quality of the CPI is simultaneously improved. In the course of 2007, Statistics Netherlands makes an effort to further improve the quality of the CPI. One of the improvements concerns the revision frequency; henceforth, the CPI basket will be revised on an annual basis to respond more rapidly to the continuously changing consumption patterns.

Gert-Jan van Steeg