Inflation rate climbs to 0.4 percent

10/11/2016 15:00
The inflation rate in the Netherlands based on the consumer price index (CPI) rose to 0.4 percent in October. Statistics Netherlands (CBS) reports that inflation reached the highest level in more than six months. Year-on-year, prices of consumer goods and services were 0.1 percent up in September.

Inflation (CPI)

Higher motor fuel prices drive inflation up

Motor fuel prices had an upward effect on inflation in October. Petrol and diesel have reached the highest price level in more than a year. The consumer price for a litre of petrol at the filling station was 1.52 euros, i.e. 4 euro cents up from October 2015. Package holidays abroad and clothes also became more expensive, thus contributing to a higher inflation.

Inflation without energy, food, alcohol and tobacco also higher

Energy and food prices 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 rose to 0.6 percent in October. In September the rate stood at 0.4 percent.

CPI for underlying clusters

Excl. = Without energy, food, alcohol and tobacco

Gap between Dutch and eurozone inflation rate narrowing

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

The HICP-based inflation rate in the Netherlands increased from -0.1 percent in September to +0.3 percent in October. The eurozone inflation rate rose to 0.5 percent, keeping the Dutch rate of inflation below the eurozone level, although the gap is narrowing. Again, energy prices were the main cause for the inflation increase in the eurozone.

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 higher than the HICP-based inflation rate.

Sources

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