Average inflation 2016 lowest in nearly 30 years

09/01/2017 14:30
Statistics Netherlands (CBS) reports that the inflation rate over 2016 averaged 0.3 percent, representing the lowest increase in consumer prices of goods and services since 1987. The annual price level increase was also low in 2014 and 2015. Over the last few months of 2016, the Dutch inflation rate went up, reaching 1.0 percent in December.

Inflation (CPI), annual average

Inflation historically low

With an average 0.3 percent over 2016, inflation was historically low for the third consecutive year; it was 1.0 and 0.6 percent over 2014 and 2015 respectively. In the past half century, annual inflation was only lower in 1986 and 1987.

Many consumer products saw no or only slight price rises last year. Goods were on average 0.2 percent lower in price while services were 0.9 percent up. The latter increase is the lowest since 2006, however.

Electricity prices keep inflation down

Average inflation in 2016 was kept lower by falling electricity prices. Both levies and delivery prices went down. In addition, rents saw a lower overall increase than in 2015, while airfares and holidays abroad also became cheaper. Consumers furthermore paid less for public bank services.

On the other hand, the price development of natural gas pushed average inflation up. Unlike the levies on electricity, levies on natural gas went up in 2016. Clothes became more expensive, and prices of petrol fell to a lesser extent than in 2015.

CAO wages rose faster than consumer prices

Collectively agreed (CAO) wages increased more rapidly than inflation for the second year in a row. The wage increase amounted to 1.9 percent over 2016. Over the past 30 years, CAO wages have only risen this high above inflation in the years 1987 and 2009.

Inflation (CPI) and CAO wages increase, annual averages

Dutch inflation rate slightly under eurozone rate

Aside from the Dutch consumer price index (CPI), CBS also publishes the inflation rate according to the European harmonised index of consumer prices (HICP).

Dutch inflation according to the HICP stood at an average 0.1 percent in 2016, the lowest rate since the HICP method was introduced in 1997. The eurozone rate stood at 0.2 percent over 2016.

The HICP is compiled according to the European harmonised method, in order to facilitate comparison with other EU member states. Price indices for the eurozone and the European Union as a whole are calculated on the basis of the HICPs of the individual member states. The European Central Bank (ECB) uses these figures to formulate its monetary policy. According to the ECB, prices in the eurozone are stable as long as the inflation rate stays around 2 percent.

Inflation (HICP), annual avarage

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