Inflation 0.2 percent in September, according to flash estimate

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© ANP / Andy Smulders
Statistics Netherlands (CBS) reports in a flash estimate that the CPI-measured inflation rate stood at 0.2 percent in September. The flash estimate was conducted on the basis of still incomplete source data. In August, consumer goods and services were 3.0 percent more expensive than one year previously. Inflation is measured each month as the change in the consumer price index (CPI) relative to the same month of the previous year.
In addition, the CPI also gives insight into the price development compared to the previous month. According to the flash estimate, consumer prices fell by 0.4 percent in September 2023 on August 2023. The regular consumer price index (CPI) figures will be published on 10 October.


Short-term price trends

CBS publishes the inflation rate each month as the change in the CPI on the same month of the previous year. However, the inflation rate does not indicate the monthly price trend within a 12-month period, while the CPI does provide that insight. According to the flash estimate, consumer prices fell by 0.4 percent in September 2023 compared to August 2023.

A side note to a comparison between two different months in the year is that the seasonal influence must be taken into account. For example, airline tickets are more expensive in holiday months than in months outside the holiday season. Prices are temporarily higher then, but it is not a structural price increase. Due to these seasonal influences, month-on-month developments are often more volatile than year-on-year developments.

Price development of product groups

In addition to the inflation rate, CBS also publishes the price development of a number of product groups as part of its flash estimate. These product groups are aggregations of expenditure categories on a particular theme, such as all services. The price development of all categories in the CPI will be published on 10 October.


Major influence of energy price developments on inflation

The price development of energy (gas, electricity and district heating) has long had a major impact on the course of the inflation rate. This is mainly due to the high prices of previous year. In the second half of 2022, energy prices in the CPI soared. In part due to this, a very high inflation rate was measured in that period. Energy prices in the CPI are now much lower than they were in 2022. As inflation is measured as the change in prices on the same month of the previous year, inflation is now lower.

As of June 2023, CBS has adopted a new method to measure and incorporate energy prices in the CPI. On 30 June, CBS published a background article explaining in more detail what the change means for the CPI, the inflation rate and the use of the CPI for indexation purposes.

HICP flash estimate

As of 1996, CBS publishes two different inflation rates. One based on the Consumer Price Index (CPI) and one on the Harmonised Index of Consumer Prices (HICP). According to the HICP flash estimate, inflation stood at -0.3 percent in September. This was 3.4 percent in August.

In order to facilitate comparison between countries, EU member states calculate a consumer price index according to internationally agreed definitions and methods. Eurostat calculates the inflation rates for the euro area and the European Union based on these harmonised indices (HICP) from all EU countries. The European Central Bank (ECB) uses the HICP to formulate its monetary policies for the euro area. In addition, most countries produce their own national consumer price index.

For the Netherlands, the main difference between the CPI and the HICP is that, unlike the CPI, the HICP does not take into account the costs related to home ownership. In the CPI, these costs are calculated based on the development of housing rents. However, this is not the only difference. The differences are further explained in another publication.

Sources

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