Household consumption dramatically down

Household spending on goods and services was 3.0 percent down in November 2012 from November 2011, the most substantial decline in more than three years. Consumption figures have been adjusted for price changes and differences in the shopping-day pattern.

Spending on durable items like cars, furniture, clothing and shoes dropped most notably and was 11.8 percent down in November from twelve months previously versus nearly 11 percent in October. On 1 October 2012, the high VAT rate was raised from 19 to 21 percent. Household spending on durable consumer goods in September virtually equalled the level of twelve months previously. Possibly, Dutch consumers have anticipated the VAT rate increase and bought more durable items in September to avoid having to pay higher prices in October.

Besides the decline in durable goods spending, households also spent less on food, drinks and tobacco (-2.0 percent). Their spending on other goods (e.g. energy and motor fuels) fell by 3.6 percent. Spending on services was only just below the level recorded in November 2011.

By means of six indicators, the Household Consumption Radar shows whether circumstances for Dutch household consumption have become more or less favourable and which factors played a crucial part in these developments. According to January’s consumption radar, improvements and deteriorations balanced each other out.

Domestic household consumption (volume, adjusted for shopping-days)

Domestic household consumption (volume, adjusted for shopping-days)

More figures can be found in dossier Business cycle.

For more information on economic indicators, the reader is referred to the Economic Monitor.