Inflation rate down to 0.7 percent in August

The consumer price index (CPI) is one of the most important indicators for inflation. 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.

Prices airfares and package holidays abroad down 

The decline in inflation in August is partly due to the price decrease of airfares and package holidays abroad. In August, airfares were 21.6 percent cheaper than in August 2019, while in July they were up by 4.8 percent year-on-year. Prices of package holidays abroad were down by 11.5 percent in August; in July, they were 0.5 percent up. A summer holiday in the Netherlands has also become cheaper. Prices of holiday park accommodations were 1.6 percent lower than one year previously, while in July they were 11.8 percent higher. 

Clothing and food also have a downward effect

In August, clothing was 4.5 percent cheaper than one year previously. In July, prices of clothing were still 1.7 percent higher. Food prices were 1 percent up in August, while in July the price increase stood at 2 percent. The smaller price increase can be attributed to the price development of vegetables and meat. Potatoes in particular were cheaper in August.

Inflation in the Netherlands and the eurozone down

Aside from the consumer price index (CPI), CBS also calculates the European harmonised index of consumer prices (HICP).

In August, HICP-based prices of goods and services in the Netherlands were 0.3 percent up year-on-year, versus 1.6 percent in July. According to provisional figures, the inflation rate in the eurozone declined from 0.4 percent in July to -0.2 percent in August, becoming negative for the first time in 4 years.

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 developments in rental property prices.

Implications of the coronavirus crisis for consumer price measurements in August

Due to coronavirus-related government measures, in August the full extent of services by e.g. airlines and events was limited or unavailable. As a consequence, there were no transactions for many of these services for which prices could be measured. In line with guidelines from Eurostat, the statistical office of the European Union, CBS chose the most appropriate estimation method for each situation. The product groups within which prices had to be estimated due to coronavirus measures account for around 2 percent of consumptive expenditure.