Calculating personal inflation

08/04/2008 15:00

The website of Statistics Netherlands now comprises a personal inflation calculator. Everyone in the Netherlands can work out his or her personal inflation by filling in the amounts they spend on various categories of consumption.

Personal consumption pattern

Official inflation is based on the average spending pattern of the Dutch population. However, as nobody has this exact average spending pattern, price rises have different consequences for everybody. A heavy smoker, for example, will be affected much more by increases in excise rates. For non-smokers this also has an effect, but in the opposite direction. Their personal inflation will be lower than average.

Official inflation

Statistics Netherlands measures official inflation by monitoring price changes of a basket of goods and services. This basket is based on what the Dutch population consumes on average. Costs for housing, energy and water have the strongest effect on inflation. Transport (incl. car fuels) accounts for just over 10 percent of official inflation. Food and non-alcoholic drinks, too, count for just over 10 percent.

Composition of the basket of gods and services for the consumer price index, 2007

Composition of the basket of gods and services for the consumer price index, 2007

Heavy smoking and inflation

Say a smoker spends 10 percent of his or her budget on tobacco products. This is about five times more than average. In 2004, his personal inflation was much higher than official inflation. This is because an increase in excise rates was introduced in that year. As this smoker’s spending on smoking was higher than average, the excise rise had a much larger effect on his personal inflation. Non-smokers also noticed an effect: their personal inflation was lower than average in 2004.

Smoking and inflation

Smoking and inflation

Oil prices affect inflation for drivers

People who spend more than average on petrol notice the effects of oil prices more in their personal inflation. In the second half of 2007, for example, oil prices rose sharply. The consequence for people who use four times as much petrol than average is clearly noticeable. Their personal inflation in the second half of 2007 was substantially higher than official inflation. When fuel prises fell heftily at the end of 2006, inflation for these drivers was much lower than average. For people who do not drive, the effect was opposite.

Driving and inflation

Driving and inflation

Gert-Jan van Steeg