Inflation rate down to 1.4 percent in July

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© Hollandse Hoogte / Peter Hilz
Statistics Netherlands (CBS) reports that the consumer price index (CPI) was 1.4 percent higher in July than in the same month last year. The inflation rate stood at 2.0 percent in June. The developments in rental property prices in particular contributed to the lower inflation.

Consumer price index (CPI)
YearMonthYear-on-year change (year-on-year % change)
2015January0
2015February0.2
2015March0.4
2015April0.6
2015May1.1
2015June1
2015July1
2015August0.8
2015September0.6
2015October0.6
2015November0.7
2015December0.7
2016January0.6
2016February0.6
2016March0.6
2016April0
2016May0
2016June0
2016July-0.2
2016August0.2
2016September0.1
2016October0.4
2016November0.6
2016December1
2017January1.7
2017February1.8
2017March1.1
2017April1.6
2017May1.1
2017June1.1
2017July1.3
2017August1.4
2017September1.5
2017October1.3
2017November1.5
2017December1.3
2018January1.5
2018February1.2
2018March1
2018April1.1
2018May1.7
2018June1.7
2018July2.1
2018August2.1
2018September1.9
2018October2.1
2018November2
2018December2
2019January2.2
2019February2.6
2019March2.8
2019April2.9
2019May2.4
2019June2.7
2019July2.5
2019August2.8
2019September2.6
2019October2.7
2019November2.6
2019December2.7
2020January1.8
2020February1.6
2020March1.4
2020April1.2
2020May1.2
2020June1.6
2020July1.7
2020August0.7
2020September1.1
2020October1.2
2020November0.8
2020December1
2021January1.6
2021February1.8
2021March1.9
2021April1.9
2021May2.1
2021June2
2021July1.4

Minor increase in rental property prices

Inflation was lower in July than in June. This is partly due to the modest developments of rental property prices. Based on preliminary numbers, rental property prices increased by 0.8 percent in July 2021 compared to the previous year. In June, rental property prices were up by 2.9 percent year-on-year.

The regulations on rental property prices have been adjusted by the Ministry of the Interior and Kingdom Relations. For example, as of July 1, rental prices of regulated rental property were no longer allowed to increase. In the previous year, the maximum increase in rental prices of regulated rental property was 6.6 percent, depending on income level.

Additionally, the annual rent increase for non-regulated rental property has been capped. This increase is fixed for three years at the inflation rate plus 1 percentage point. On September 6, CBS will publish the final housing rent development results along with further details.

Developments in holiday prices push inflation down

In addition to rental property prices, prices of going on holiday also had a downward effect on inflation. A stay in a bungalow park cost 6.3 percent less in July than in the previous year, while the year-on-year price increase in June stood at 3.7 percent. In July last year, prices were at their highest level ever recorded. Package deals for holidays abroad were 4.4 percent cheaper in July than in the previous year.

Gas and electricity more expensive

Gas and electricity were more expensive in July and had an upward effect on inflation. The price of energy has been rising since August 2020. The variable costs for the supply of electricity was higher by 15.8 percent than one year previously, up from 6.3 percent in June. Gas was 12 percent more expensive than the previous year, up from 5.1 percent in June.

In addition to rising energy prices, the developments in the pricing of food products also drove up inflation.

CPI: Major contributions to year-on-year change
 July (percentage point)June (percentage point)
All items1.42
Housing, water and
energy		0.70.88
Transport0.330.37
Miscellaneous goods
and services		0.260.32
Furnishing and household
equipment		0.140.11
Alcoholic beverages and
tobacco		0.060.04
Clothing and footwear0.040.14
Restaurants and hotels-0.040.13
Food and non-alcoholic
beverages		-0.09-0.18
Recreation and culture-0.160.09

Increase HICP in euro area higher than in the Netherlands

Aside from the consumer price index (CPI), CBS also calculates the European harmonised consumer price index (HICP). According to the European HICP, consumer goods and services in the Netherlands were 1.4 percent more expensive in July than in the same month last year, up from 1.7 percent in June. Inflation in the euro area rose from 1.9 to 2.2 percent and was higher than inflation in the Netherlands for the second month in a row.

 
Harmonised Index of Consumer Prices (HICP)
yearmonthThe Netherlands (year-on-year % change)Euro area (year-on-year % change)
2015January-0.7-0.6
2015February-0.5-0.3
2015March-0.3-0.1
2015April00.2
2015May0.70.6
2015June0.50.5
2015July0.80.5
2015August0.40.4
2015September0.30.2
2015October0.40.4
2015November0.40.1
2015December0.50.3
2016January0.20.3
2016February0.3-0.1
2016March0.50
2016April-0.2-0.3
2016May-0.2-0.1
2016June-0.20
2016July-0.60.2
2016August0.10.2
2016September-0.10.4
2016October0.30.5
2016November0.40.6
2016December0.71.1
2017January1.61.7
2017February1.72
2017March0.61.5
2017April1.41.9
2017May0.71.4
2017June11.3
2017July1.51.3
2017August1.51.5
2017September1.41.6
2017October1.31.4
2017November1.51.5
2017December1.21.3
2018January1.51.3
2018February1.31.1
2018March11.4
2018April11.2
2018May1.92
2018June1.72
2018July1.92.2
2018August1.92.1
2018September1.62.1
2018October1.92.3
2018November1.81.9
2018December1.81.5
2019January21.4
2019February2.61.5
2019March2.91.4
2019April31.7
2019May2.31.2
2019June2.71.3
2019July2.61
2019August3.11
2019September2.70.8
2019October2.80.7
2019November2.61
2019December2.81.3
2020January1.71.4
2020February1.31.2
2020March1.10.7
2020April10.3
2020May1.10.1
2020June1.70.3
2020July1.60.4
2020August0.3-0.2
2020September1-0.3
2020October1.2-0.3
2020November0.7-0.3
2020December0.9-0.3
2021January1.60.9
2021February1.90.9
2021March1.91.3
2021April1.71.6
2021May22
2021June1.71.9
2021July1.42.2

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 euro area 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.

The main conceptual difference between the CPI and the HICP for the Netherlands is that the HICP, unlike the CPI, 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 July

Due to the government's COVID-19 countermeasures, some services were either limited or unavailable in July, such as air travel or larger events. As a result, there were no transactions for these services that allowed for price measurements. In accordance with the Eurostat guidelines, CBS opted for the most appropriate estimation method in each situation. The product groups that required price estimates as a result of the coronavirus measures account for about 1 percent of consumer spending.

The coronavirus pandemic has significantly changed consumers’ spending patterns. The change in consumption patterns will affect inflation in 2021.

Sources

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