Inflation rate up to 10.3 percent in July

Energy more expensive despite VAT reduction

The price development of energy (electricity, gas and district heating) caused inflation to rise further. In July, energy was 108 percent more expensive than one year previously. In June, this was 84 percent. As of 1 July 2022, VAT on energy has been temporarily reduced from 21 percent to 9 percent. This reduction will be in force until December 31, 2022.

Energy currently makes a significant contribution to overall inflation. The price development of energy is measured by CBS on the basis of new contracts. CBS has started research on the measurement of energy prices in the CPI.

Higher increase in rental property prices

The rental property prices had an upward effect on the inflation rate as well. Based on provisional figures, rental property prices increased by 3.0 percent in July 2022 compared to the previous year. This increase is larger than in July 2021, when the increase in rental property prices averaged 0.8 percent.

As of 1 July 2022, the maximum increase in rental prices of regulated rental property will depend on income level. For households that fall under the low-income threshold, the rent increase is a maximum of 2.3 percent. For households with a high income, the rent increase is a maximum of 100 euros on the monthly rent.

The annual rent increase for non-regulated rental property has been capped in 2022, as it was in 2021. The maximum rent increase for 2022 is 3.3 percent, while it was 2.4 percent in 2021. On 2 September 2022, CBS will publish the final housing rent development results along with further details.

Larger increase in food prices

Food prices rose further in July. Food was 12.3 percent more expensive than one year previously. In June, food prices were up by 11.2 percent. This is mainly due to the price development of cereals, dairy products and sugar and confectionery (including ice cream). In addition to food, package holidays and the costs of banking services also had an upward effect on inflation.

Smaller increase in motor fuel prices

However, the price development of motor fuels had a downward effect on the inflation rate. The price increase of motor fuels amounted to 25 percent relative to July 2021. In June, motor fuels were 35 percent more expensive than one year previously. The average price for a litre of petrol at the pump fell from 2.35 euros in June to 2.21 euros in July. The price of diesel was 2.07 euros in July against 2.14 euros in June.

Euro area inflation rises

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 11.6 percent more expensive in July than in the same month last year, up from 9.9 percent in June. Inflation in the euro area rose from 8.6 percent in June to 8.9 percent in July.

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.

Implications of the coronavirus crisis for consumer price measurements

Due to the government's COVID-19 countermeasures, several services have been either limited or unavailable since April 2020. As a result, there were no transactions that allowed for price measurements for some of the services. In accordance with the Eurostat guidelines, CBS has opted for the most appropriate estimation method in each situation. In July 2022, prices were no longer estimated in connection with COVID-19, but estimates made in the same month last year still affect this month's inflation.