Fastest rise in consumer prices since 2003

Food prices had the largest upward effect

At 2.6 percent, the year-on-year increase in consumer prices exceeded that of 2018, when prices of consumer goods and services rose by 1.7 percent. This is mainly related to price developments of food and non-alcoholic beverages. In 2019, supermarket prices of food and beverages increased by an average of 4 percent, the sharpest rise in more than a decade. Food represents more than 10 percent of all household consumption expenditure. A sharper rise in food prices therefore has a significant impact on the price development of consumer goods and services.

Furthermore, prices of food and beverage services (restaurants, cafés and office canteens) were up by 4.6 percent last year, against 2.4 percent one year previously. The sharper price rise in food and non-alcoholic beverages is due to the low VAT rate increase – from 6 to 9 percent – which became effective on 1 January 2019.

Food and non-alcoholic beverages are subject to the low VAT rate. Last year, the reduced rate applied to 22.5 percent of all household consumption. On average, prices of consumer products subject to reduced VAT were up by 4.1 percent in 2019 relative to 2018. For comparison: in the same period, the average price increase of products within the standard (21 percent) VAT band stood at 2.3 percent.

Top 5 largest price movements

Just as in 2018, the increase in energy prices was one of the sharpest price rises of last year. Electricity went up by an average 15.7 percent, while the price of natural gas rose by 10.6 percent on average. Both increased levies and supply tariffs for electricity and natural gas were substantially higher in 2018.

Not all consumer products went up in price. Home care services showed the sharpest price drop, followed by mobile telephony and sound and video equipment.

CAO wages rose less rapidly than consumer prices

Last week, CBS reported that collectively agreed (CAO) wages rose less rapidly than consumer prices for the first time in five years. According to provisional figures, the year-on-year increase in CAO wages was 2.5 percent higher in 2019 than in 2018.

Dutch consumer price rise exceeds eurozone average

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

Based on the HICP, prices in the Netherlands increased by 2.7 percent on average in 2019, the second largest price increase in the eurozone. In 2018, the increase was 1.6 percent. Across the euro area, the price increase slowed down from 1.7 percent in 2018 to 1.2 percent in 2019. In other words, prices rose less rapidly in the euro area but instead more rapidly in the Netherlands. This is due to raising of the low VAT rate and energy tax in the Netherlands as of January 2019.

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.