Inflation rate down to 5.7 percent in June

In addition to the overall inflation rate, CBS also calculates monthly average price developments if energy (gas, electricity and district heating) and motor fuel prices are not taken into account. Excluding energy and motor fuels, inflation would have been 7.2 percent, down from 7.9 percent in May.

Inflation is measured each month as the increase in the consumer price index (CPI) relative to the same month in the previous year. The consumer price index shows the price development of a package of goods and services as purchased on average by Dutch households. An inflation rate of 5.7 percent in June 2023 means that consumer product prices were 5.7 percent higher than in June 2022. This means the 5.7-percent inflation in June was not on top of the 6.1-percent inflation in May.

Inflation down due to price development of motor fuels and food

The decrease in inflation was mainly due to the price development of motor fuels and food. In June 2023, motor fuels were 23.2 percent cheaper than in June 2022. In May, prices were 18.3 percent lower than in the same month last year. Food was 13.1 percent more expensive in June relative to one year previously. In May, the year-on-year price increase was 15.2 percent.

Upward effect of energy

The price development of energy (electricity, gas and district heating), on the other hand, had an upward effect on the inflation rate. Although energy was 19.1 percent cheaper in June than in the same month last year, in May the year-on-year price decrease was 24.9 percent.

New method of measuring energy prices

As of June 2023, CBS uses a new method to measure energy prices and incorporate them in the CPI. Under the new methodology, CBS collects household contract data from energy suppliers. These data allow for a better calculation of what rates households are actually paying for gas and electricity. The old energy price methodology relied solely on data from new contracts offered by energy suppliers.

The method change affects the inflation rate. The inflation rate for June 2023 is the difference between the CPI for June 2023 and June 2022. However, while the current CPI uses the new method for measuring energy prices, the June 2022 CPI is based on the old method. This means that the inflation rate for June 2023 contains a so-called 'method break'. On 30 June, CBS published a background article explaining in more detail what this switch means for the CPI, the inflation rate and the use of the CPI for indexation purposes.

Tobacco more expensive

Tobacco was 14.7 percent more expensive in June than in the same month last year; in May, the price increase was 1.5 percent. The increase in excise duty on tobacco products as of 1 April 2023 caused prices to rise. As tobacco stocks were still being sold at old excise rates in the first months after the excise duty was raised, the excise duty increase has a somewhat delayed effect on sales prices.

Price developments in the short term

CBS publishes a monthly report on inflation: the development of the CPI compared to the same month one year previously. However, this figure says nothing about the development of prices during such a twelve-month period. The CPI can also be used to calculate the average price development compared to the previous month.

Consumer prices fell by 0.3 percent in June 2023 relative to May. The price level during the past twelve months was the highest in October 2022. After that, the trend was downward until February 2023. From February to May, prices increased for four months in a row. In June, prices fell compared to the previous month.

On a side note, when comparing with the previous month, seasonal influences must be taken into account. For example, airline tickets are more expensive during holiday months than in months outside the holiday season. Prices are temporarily higher then, but this is not a structural price increase. Due to these seasonal influences, month-on-month developments are often more volatile than year-on-year developments.

Euro area inflation down

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 6.4 percent more expensive in June than in the same month last year, down from 6.8 percent in May. Inflation in the euro area fell from 6.1 percent in May to 5.5 percent in June.

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. The differences are further explained in the article Differences between consumer price figures.