The consumer price index (CPI) is an important indicator for inflation, but not the only one. It is an index for price changes in a basket of consumer goods and services, such as groceries, clothing, petrol, rent and insurance premiums. Inflation is a broader term which covers more than consumer goods and services; for example, prices of owner-occupied houses, manufactured products, shares and gold are also subject to change.
Air fares and holiday park accommodation rates higher
The year-on-year increase in consumer prices over May was significantly higher than in April. This was mainly due to price developments of air fares, package holidays abroad and holiday park accommodations. Prices for these services go up during school holidays and holiday periods. In 2017, the May holiday period fell in April for the most part, while this year’s spring holiday was mainly in May. In addition, this year’s Whitsun weekend fell in May as opposed to June last year. As a result, a stay in a holiday park was 15 percent more expensive than in May 2017.
Motor fuels also up in price
The price increase of motor fuels had an upward effect on the consumer price index. The year-on-year price increase stood at 9.7 percent in May, versus 2.8 percent in April. Prices for petrol and diesel reached their highest level in almost four years. The consumer price for a litre of petrol at the filling station was 1.67 euros and for a litre of diesel 1.36 euros.
Rise in Dutch consumer prices the same as in eurozone
In addition to the consumer price index (CPI), CBS also calculates the European harmonised price index (HICP).
In May, HICP-based prices of goods and services in the Netherlands were 1.9 percent up year-on-year, versus 1.0 percent in April. In the eurozone, the price increase went up from 1.2 to 1.9 percent. This is the highest increase in the HICP after September 2013.
The HICP is compiled according to the European harmonised method in order to facilitate comparison between the various 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.
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.
CPI for April 2018 adjusted
As of April 2018, Statistics Netherlands (CBS) has made upward adjustments to the Consumer Price Index (CPI and HICP) for men’s, women’s and children’s clothing. CBS research had shown that, as a result of a new price observation method for clothing articles, the expected average year-on-year changes in 2018 relative to 2017 would be too low otherwise. The adjustment of the indices for clothing articles also affects the overall CPI and HICP results. The year-on-year change in the CPI for April 2018 has been revised upwards from 0.9 to 1.1 percent. The results for the first three months of 2018 are not revised.