Dutch inflation dips into negative territory

04/08/2016 15:00
Statistics Netherlands reports that the CPI-based inflation rate in the Netherlands fell to - 0.3 percent in July. For the first time since December 1987, consumer goods and services are cheaper than one year previously.

Inflation (CPI)

Average rent increase 1.8 percent

Dutch house rents are annually raised in July. The average residential rent increase was 1.8 percent in July 2016, versus 2.4 percent in July 2015, which had a downward effect on inflation.

Price developments in the food sector also keep inflation down

In July, year-on-year food prices rose 0.5 percent, as against 1.4 percent in June. This also kept inflation down. Lower petrol prices and cheaper package holidays and airfares also drove inflation down. On the other hand, clothing prices fell less sharply during this year’s summer sales than in July 2015, which drove inflation up.

Inflation excluding, energy, food, alcohol and tobacco also marginally lower

Price developments for energy and food vary strongly and alcohol and tobacco prices are frequently raised as a result of higher excise duties. Therefore, inflation is also measured without taking these product groups into account. According to this criterion, the rate in July was 0.3 percent, versus 0.5 percent in May and June.

Inflation (CPI) and price developments underlying clusters

Excl. = Without energy, food, alcohol and tobacco

Inflation in the Netherlands below eurozone level

In addition to the consumer price index (CPI), CBS also publishes the European harmonised price index (HICP).

The HICP inflation rate in the Netherlands fell substantially, from -0.2 percent in June to -0.6 percent in July. The eurozone inflation rate rose from 0.1 to 0.2 percent. As a result, the gap between the Dutch rate of inflation and the eurozone rate became wider. Across the eurozone, food, alcohol and tobacco prices increased inflation.

Inflation (HICP)

The HICP is calculated according to the European harmonised method to facilitate comparison between the various EU member states. Price index figures for the eurozone and the European Union as a whole are calculated on the basis of the HICPs of the separate member states. The European Central Bank uses these figures to formulate its monetary policy.

Unlike the CPI, the HICP does not take into account the costs related to home ownership. In the Dutch CPI, these costs are calculated on the basis of rent levels. Because the rent increase is higher than the average price increase of other goods and services, the CPI-based Dutch inflation rate is currently somewhat below the level of the HICP-based inflation rate.

Sources

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