Inflation rate up to 1.6 percent in June

The consumer price index (CPI) is one of the most important indicators for inflation. 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.

Motor fuels, tobacco and clothes push up inflation rate

The price development of motor fuels had an upward effect on inflation. In June, motor fuels were 7.9 percent cheaper than one year previously, against a year-on-year decline of 14.1 percent in May. Prices of motor fuels plummeted in the first months of 2020, but increased again in June.

Higher excise duties on tobacco as of 1 April 2020 led to a further increase in tobacco prices last month. In June, tobacco was 17.9 percent more expensive than in same month last year, while in May the price increase was still 12 percent. Because retailers still sold stocks of tobacco at former excise duty rates, the excise duty increase was not yet fully reflected in the selling prices of tobacco.

The price development of clothes had an upward effect on the consumer price increase as well. In June, clothes were 0.8 percent more expensive than one year previously, while in May clothes were 0.5 percent cheaper year-on-year.

Inflation gap between the Netherlands and the eurozone is widening

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

In June, HICP-based prices of goods and services in the Netherlands were 1.7 percent up year-on-year, versus 1.1 percent in May. The price increase in the eurozone went up from 0.1 percent in May to 0.3 percent in June. The difference between the HICP in the Netherlands and in the eurozone has widened.

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.

Implications of the coronavirus crisis for consumer price measurements in June

Due to coronavirus-related government measures, in June the full extent of services by e.g. airlines and fitness centres was limited or unavailable . As a consequence, there were no transactions for many of these services for which prices could be measured. In line with guidelines from Eurostat, the statistical office of the European Union, CBS chose the most appropriate estimation method for each situation. The product groups within which prices had to be estimated due to coronavirus measures account for around 6 percent of consumptive expenditure.