Inflation rate down to 4.6 percent in July

In addition to the overall inflation rate, CBS also calculates the 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 6.8 percent, down from 7.2 percent in June.

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 4.6 percent in July 2023 means that consumer product prices were 4.6 percent higher than in July 2022. This means the 4.6-percent inflation in July was not on top of the 5.7-percent inflation in June.

Inflation down due to price development of energy

The decrease in inflation was mainly due to the price development of energy (electricity, gas and district heating). Energy prices have been falling steadily since January. In July, energy was 34.5 percent cheaper than twelve months previously. Prices in June were 19.1 percent lower than in the same month last year.

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. The method change affects the inflation rate. 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.

Smaller price increases for clothing and food

The price developments of clothing and food also had a downward effect on the development of inflation. Clothing was 5.5 percent more expensive in July than twelve months previously, in June it was 10.5 percent. The annual increase in food prices fell from 13.1 percent in June to 11.7 percent in July. The price development of dairy in particular contributed to this decrease.

Smaller increase in rental property prices

Inflation also fell due to the development of rental property prices. Based on provisional figures, rental property prices increased by 2.1 percent in July 2023 compared to the previous year. This increase is smaller than in July 2022, when the increase in rental property prices averaged 3.0 percent.

The development of rental prices is not the same for all tenants. The maximum permitted rent increase depends on the type of rental (regulated or liberalised) and the level of income. Low-income households will be eligible for a rent reduction in 2023 under certain conditions.

Inflation up due to price development of motor fuels and holiday park accommodations

As of 1 July 2023, the excise duty rates for motor fuels have been raised. This had an upward effect on the development of inflation. Although motor fuels were 11.1 percent cheaper in July 2023 than in July 2022, in June 2023 the annual price decrease was 23.2 percent. The increase in the excise duty rates for petrol, diesel and LPG in July 2023 follows an earlier rate reduction as of April 2022. In addition to motor fuels, the prices of holiday park accommodations also had an increasing effect on the development of inflation.

Price developments in the short term

Every month, CBS reports on inflation with the year-on-year development of the CPI. 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 relative to the previous month. Consumer prices rose by 1.0 percent in July 2023 relative to June. The price level during the past twelve months was the highest in October 2022.

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 5.3 percent more expensive in July than in the same month last year, down from 6.4 percent in June. Inflation in the euro area fell from 5.5 percent in June to 5.3 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. The differences are further explained in the article Differences between consumer price figures.