Inflation rate down to 3.0 percent in August

The price development of energy has had a major impact on inflation for some time now. In addition to the overall inflation rate, CBS also calculates the monthly average price developments if energy (gas, electricity and district heating) and motor fuel prices are not taken into account. Excluding energy and motor fuels, inflation would have been 6.4 percent in August, down from 6.8 percent in July.

Price developments in the short term

Every month, CBS reports on inflation with the year-on-year development of the CPI. However, this figure says nothing about the monthly development of prices during such a twelve-month period. The CPI does provide that insight. Consumer prices rose by 0.4 percent in August 2023 relative to July. The price level during the past twelve months was the highest in October 2022.

On a side note, when comparing with the previous month, seasonal influences must be taken into account. For example, airline tickets are more expensive during holiday months than in months outside the holiday season. Prices are temporarily higher then, but this is not a structural price increase. Due to these seasonal influences, month-on-month developments are often more volatile than year-on-year developments.

Inflation down due to price development of energy

The decrease in inflation was mainly due to the price development of energy (electricity, gas and district heating). In August, energy was 46.7 percent cheaper than twelve months previously. Prices in July were 34.5 percent lower than in the same month last year.

The price development of energy has had a major impact on inflation for some time now. This is mainly due to high prices last year. In the second half of 2022, energy prices in the CPI increased sharply. Partly because of this, very high inflation was measured during that period. Energy prices in the CPI are now considerably lower than in 2022. Inflation is measured as the development of prices compared to the same month in the previous year, which is why it is now lower.

As of June 2023, CBS uses a new method to measure energy prices and incorporate them in the CPI. The method change affects the inflation rate. On 30 June, CBS published a background article explaining in more detail what this switch means for the CPI, the inflation rate and the use of the CPI for indexation purposes.

Smaller price increase for food

In addition to energy, the price development of food also had a downward effect on the development of inflation. The annual increase in food prices fell from 11.7 percent in July to 9.7 percent in August. The price development of meat, bread and cereals in particular contributed to this decrease. In addition, the price development of airline tickets had a downward effect.

Upward effect of motor fuels and clothing

The price development of motor fuels, on the other hand, had an upward effect on the development of inflation. Although motor fuels were 0.6 percent cheaper in August 2023 than in August 2022, in July 2023 the annual price decrease was 11.1 percent. In addition to motor fuels, the prices of clothing also had an increasing effect on the development of inflation.

Inflation in the euro area higher than in the Netherlands

Since 1996, CBS has published two different inflation rates: one based on the Consumer Price Index (CPI) and one based on the Harmonised Index of Consumer Prices (HICP). According to the European HICP, consumer goods and services in the Netherlands were 3.4 percent more expensive in August than in the same month last year, down from 5.3 percent in July. Inflation in the euro area remained 5.3 percent in August.

Difference between CPI and HICP

In order to facilitate comparison between countries, EU member states calculate a consumer price index according to internationally agreed definitions and methods. The European Central Bank (ECB) uses the HICP to formulate its monetary policies in the euro area. In addition, most countries produce their own national consumer price index.

The main conceptual difference between the CPI and the HICP for the Netherlands is that, unlike the CPI, the HICP does not take into account the costs related to home ownership. In the Dutch CPI, these costs are calculated based on developments in rental property prices. The differences are further explained in the article Differences between consumer price figures.