Flash estimate: inflation 3.2% in January, excluding energy at 3.5%

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Statistics Netherlands (CBS) reports in a flash estimate that the CPI-measured inflation rate stood at 3.2 percent in January. The estimate was conducted on the basis of still incomplete source data. This was 1.2 percent in December. Inflation is measured monthly as the change in the consumer price index (CPI) relative to one year previously.
The CPI also presents the price development compared to the previous month; according to the flash estimate, consumer prices were 0.5 percent lower in January than they were in December.

The price development of energy (gas, electricity and district heating) has long had a major impact on the course of inflation. In January 2024, the impact of energy price developments on inflation decreased. The inflation rate excluding energy was 3.5 percent according to the flash estimate. In December it occupied a share of 3.4 percent.

The regular consumer price index (CPI) figures for January will be published on 8 February.

 

Short-term price trends

The CPI provides insight into monthly price developments, not only relative to one year previously (the CPI inflation rate), but also relative to the previous month. According to the flash estimate, consumer prices rose by 0.5 percent in January 2024 relative to December 2023.

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

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Impact of energy price developments on inflation decreasing

The price development of energy had a considerable impact on the inflation for some time. In the course of 2022, energy prices in the CPI soared. This contributed to the very high inflation rate in that period. From January 2023 onwards, the price cap, among other things, resulted in lower energy prices. This was one of the reasons why the inflation rate fell in 2023. Because the introduction of the price cap in January was exactly one year ago, and inflation is measured as price developments relative to the same month one year previously, the impact of energy price developments on inflation declined in January 2024.

As of June 2023, CBS uses 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 new method means for the CPI, the inflation rate and the use of the CPI for indexation purposes.

Price developments in product groups

In addition to the inflation rate, CBS also publishes price developments for a number of product groups as part of its flash estimate. These product groups are aggregations of expenditure categories on a particular theme, e.g. all services. The price development of all categories in the CPI will be published on 8 February.

HICP flash estimate

As of 1996, CBS publishes two different rates of inflation: 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 3.1 percent in January. This was 1.0 percent in December.

In order to facilitate comparison between countries, EU member states calculate a consumer price index according to internationally agreed definitions and methods. Based on these harmonised indices (HICP) of all EU countries, Eurostat calculates the eurozone and the EU inflation rates. 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 home rental prices. However, this is not the only difference. The differences are further explained in another publication.

Sources

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