Inflation down to -0.4% in October; 5.1% excluding energy

The fact that inflation is negative in October is entirely because energy prices were particularly high in October 2022. Excluding energy and motor fuels, inflation would have been 5.1 percent in October, down from 5.5 percent in September. In the first half of 2023, inflation excluding energy and motor fuels was higher than it is now, peaking at 8.1 percent in February and March.

The drop in inflation does not mean that prices fell in October 2023 relative to September 2023. The CPI also gives insight into price developments on the previous month. Consumer prices were 0.4 percent higher in October than they were in September.

Inflation low due to price development of energy

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, with a peak in October 2022. Partly because of this, high inflation rates were 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 lower now.

As of June 2023, CBS uses a new method to measure energy prices and incorporates 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.

Inflation down due to smaller increase in food prices

Inflation fell from 0.2 percent in September to -0.4 percent in October. The development of food prices, among other things, caused this decline. Although food was 7.9 percent more expensive in October than it was last year, it stood at 9.4 percent in September. In addition to food, price developments in motor fuels and clothing also had a dampening effect on inflation.

Price developments in the short term

The CPI does not only give insight into the price developments relative to one year previously (inflation) but also compared to the previous month. According to the flash estimate, consumer prices rose by 0.4 percent in October 2023 relative to September 2023.

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 in the euro area down

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 1.0 percent cheaper in October than in the same month last year. In September, the inflation rate was -0.3 percent according to the HICP. Inflation in the euro area fell from 4.3 percent in September to 2.9 in October.

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.