Consumer prices 2.5 percent up in July

The consumer price index (CPI) is an important indicator for inflation, but not the only one. It is an index for price changes in a basket of consumer goods and services, such as groceries, clothing, petrol, rent and insurance premiums. 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.

Price increase of natural gas and electricity smaller

In July, many energy companies reduced electricity and gas prices for variable rate contracts, which had a downward effect on consumer price inflation. The year-on-year increase in electricity prices still amounted to 18.8 percent in June; one month later, this was 13.1 percent. Likewise, natural gas prices increased less on an annual basis: from 13.6 percent in June to 8.7 percent in July.

Higher increase in private housing rental prices

On the other hand, the development of private rental prices paid by tenants had an upward effect on the CPI inflation. Based on provisional figures, the average increase was 2.5 percent in July 2019, i.e. a modest rise from 2.3 percent in July 2018.

Rise in Dutch consumer prices remains higher than in eurozone

In addition to the consumer price index (CPI), CBS also calculates the European harmonised index of consumer prices (HICP).

In July, HICP-based prices of goods and services in the Netherlands were 2.6 percent up year-on-year versus 2.7 percent in June. In the eurozone, the price increase went down from 1.3 percent in June to 1.1 percent in July. Since January 2019, the Dutch HICP has been significantly higher than the average across the eurozone due to raising of the low VAT rate and energy taxes in the Netherlands as of that month.

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 private rental price developments.