Prices frequent purchases rise less rapidly than prices infrequent purchases

11/07/2014 15:00

Prices of frequently bought goods and services have increased less rapidly since July 2013 than prices of goods and services Dutch consumers buy only rarely. In the prior four years, the situation was the other way round.

Price developments frequent and infrequent purchases

Price developments frequent and infrequent purchases

Frequent purchases account for one third of inflation

Products consumers buy on a regular basis they often pay in cash or with their bank card. Prices of frequent purchases have risen less rapidly since July 2013 than prices of infrequent purchases, like insurances and rents. In June 2014, prices of frequent and infrequent purchases were respectively 0.5 and 1.2 percent up from June 2013. In the prior four years, the situation was the other way round, i.e. prices of frequent purchases increased faster than prices of less frequent purchases. Frequent purchases account for one third of inflation; food and motor fuels are important products consumers buy frequently. Just because frequent purchases are often bought and paid immediately in cash or by bank card, they have a significant effect on the so-called ‘perceived inflation’.  

Frequent purchases by type of purchase,2014

Frequent purchases by type of purchase,2014

Price increase motor fuels and food products less substantial

In the category frequent purchases, prices of motor fuels and food products, in particular fresh vegetables, fresh fruit and potatoes, rose less rapidly in relative terms. Prices of petrol and - to a lesser extent - LPG and diesel also rose less rapidly. In the period August 2013-April 2014, the price of petrol had the largest impact on the smaller price increase in the category frequent purchases, but in May and June petrol prices soared again.  

Rent increase restricts price reduction infrequent purchases

The rent increase introduced in July 2013 largely accounts for the fact that prices of less frequent purchases increased faster than prices of frequent purchases. The upward effect of the rent increase on inflation was largely offset by the fact that, since October 2013, lower energy prices for private household consumption had a considerable downward effect on inflation. This also applies to other less frequent purchases, like the costs of telephone and internet services.

Léon Willenborg