January's inflation rate marginally lower

Statistics Netherlands (CBS) reports today that January’s inflation rate according to the consumer price index (CPI) was 0.6 percent. In December consumer prices were 0.7 percent higher than one year previously.

Prices home care services and airline tickets drag inflation down

Price developments for home care services dragged inflation down. In January 2016 home care service prices were almost equal to January 2015, but the year-on-year price increase in December was 43.1 percent. In January 2015 the deduction under the Act Compensation Chronically Ill Patients and Disabled was abolished and consumers had to pay more for home care services, which had an upward effect on inflation in 2015, but the effect has worn off now. Airline ticket prices also had a downward effect on inflation. In January 2016 airline tickets were 5.1 percent cheaper than in the same month in 2015.

Clothing prices, on the other hand, forced inflation up. In January prices of clothes were 1.8 percent above the level of January 2015. In December clothing prices were 3 percent lower on an annual basis.

Tax on natural gas up, tax on electricity down

Tax rates are often changed in January. Tax due on natural gas rose by 32.5 percent, but tax due on electricity fell by 55.6 percent. The consumer tax on non-alcoholic drinks was raised in January. Drinks like mineral water, soft drinks and fruit juice became more expensive.

Inflation without energy, food, alcohol and tobacco

As prices of energy and food vary considerably and excise duty on alcohol and tobacco is frequently raised, inflation is also measured excluding these product groups. In that case, the rate for January stood at 1.0 percent and the rate for December at 1.3 percent.

Dutch inflation rate below eurozone level

In addition to the consumer price index (CPI), CBS also publishes the European harmonised price index (HICP).
In January, the Dutch HICP inflation rate was 0.2 percent, i.e. below the level of December, when the rate was 0.5 percent. The eurozone rate rose to 0.4 percent in January. The Dutch rate is currently lower than the eurozone rate. The last time this occurred was in March 2015.

The HICP is calculated in accordance with the European harmonised method, which facilitates comparison with other member states of the European Union. Price indices for the eurozone and the EU as a whole are calculated on the basis of the HICPs of the individual member states. The European Central Bank (ECB) is using 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 rent levels. However, because the increase in rental prices is higher than the average price increase of other goods and services, the Dutch inflation rate based on the CPI is currently lower than the rate based on the HICP.