Inflation rate 1.3 percent in 2020

Energy and motor fuels cheaper

In 2020, prices of electricity declined by an average of 39.6 percent year-on-year. Electricity prices were still up by 15.7 percent in 2019. The price decrease last year was largely due to a raised tax credit of 216 euros; this credit is deducted from the energy bill. The price of natural gas rose by 2.6 percent on average last year, due to rate increases in energy tax and the renewable energy storage (ODE). In 2019 the gas price increase still amounted to 10.6 percent. Consumer energy prices fell by nearly 12 percent in 2020.

Motor fuels were also cheaper in 2020. The price of petrol was 5.2 percent lower than in the previous year while diesel dropped by 8.8 percent. In 2019 these fuels were still up by 1.9 and 1.8 percent year-on-year, respectively. Whereas consumers still paid an average of 1,647 euros for a litre of petrol at the pump in 2019, this was 1,562 euros in 2020. The litre price for diesel at the pump went down from 1,356 euros to 1,237 euros.

Food prices had downward effect as well

In 2020, the price increase of food products in the supermarkets was smaller than in 2019. Food products became 2.0 percent more expensive, against a price increase of 4.3 percent in 2019. The increase was higher in 2019 due to the raised low VAT rate, from 6 to 9 percent, as of 1 January 2019.

However, consumers paid more for tobacco in 2020. Rolling tobacco was up by 19.3 percent and cigarettes by 10.4 percent year-on-year. This represents the largest tobacco price increase since 2005, mainly as a result of increased excise duties. The excise duty on 50 grams of rolling tobacco rose by 2.50 euros in 2020. An additional 1.14 euro excise duty was levied on a pack of 20 cigarettes.

CAO wages rose more rapidly than consumer prices

Last week, CBS reported that collectively agreed wages (CAO) rose by 3.0 percent in 2020. According to provisional figures, the year-on-year increase in CAO wages is therefore 1.7 percentage points higher than consumer price inflation. The last time an annual increase in collectively agreed wages and the annual inflation rate showed a larger discrepancy was in 1986, when the difference was 2.0 percentage points.

Dutch consumer price rise exceeds eurozone average

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

Based on the HICP, prices in the Netherlands increased by 1.1 percent on average in 2020. In 2019, the increase was 2.7 percent. Across the euro area, the price increase slowed down from 1.2 percent in 2019 to 0.3 percent in 2020.

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 rent levels.

Implications of the coronavirus crisis for consumer price measurements in 2020

Due to coronavirus-related government measures, in 2020 the full extent of services by e.g. airlines, events and restaurants 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 5 percent of consumptive expenditure in 2020. All choices are explained in a note and in a table is indicated per product group if an estimate had to be made.