Consumer price increase drops from 2.7 to 1.8 percent

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.

Decrease in electricity prices

The year-on-year price increase of consumer products in January was much lower than in December. This was mainly due to the price development of electricity. In January, the price of electricity was 38.2 percent down; in December it was still 9.1 percent up year-on-year.

For each electricity connection, a tax reduction applies. As of 2020, this reduction has been raised to 527.17 euros. In 2019, however, the amount was lowered to 311.62 euros. At the beginning of March, CBS will publish more information about the energy account.

Impact of VAT increase in January 2019 has worn off

On 1 January 2019, the low VAT rate was raised from 6 to 9 percent. For one year, this pushed up the price increase but the upward effect has worn off in the meantime. Partly as a result of this, the year-on-year price increase of food and non-alcoholic beverages fell from 3.7 percent in December to 1.8 percent in January.

Motor vehicle tax up

In January, the motor vehicle tax rate rose by 3.7 percent. This is the sharpest increase since 2015. One of the reasons for the higher rate is the implementation of a particulate matter surcharge for certain diesel cars. In December, CBS already published an article stating that the budgeted revenues from motor vehicle taxation for 2020 are higher.

In January, contributions to supplementary health insurance were raised by 4.7 percent on average. These premiums are adjusted in January on an annual basis. Last year, premiums rose by 4.2 percent.

Consumer price rise in the Netherlands higher than in eurozone

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

In January, HICP-based prices of goods and services in the Netherlands were 1.7 percent up year-on-year, versus 2.8 percent in December. In the eurozone, the price increase went up from 1.3 percent in December to 1.4 percent in January. The difference between the price increase in the Netherlands and the eurozone is much smaller now, but the price rise in the Netherlands is still higher than in the eurozone.

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 developments in rental property prices.