Bridges over canals in Amsterdam
Statistics Netherlands (CBS) reports that the consumer price index (CPI) was 9.7 percent higher in March than in the same month last year. In February, the inflation rate stood at 6.2 percent. The inflation in March is the highest since May 1976.
Increase in energy prices
The significant increase in inflation was mainly due to the price development of energy (electricity, gas and district heating). In March, energy was 157 percent more expensive than in the same month one year previously. In February, this was 77 percent.
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.
Motor fuels and food more expensive
Aside from energy, the price development of motor fuels had an upward effect on the inflation rate. The price increase of motor fuels amounted to 36.5 percent relative to March 2021. In February, motor fuels were 24 percent more expensive than one year previously. The average price for a litre of petrol at the pump rose from 2.05 in February to 2.29 euros in March. For diesel, the price went up from 1.74 to 2.12 euros.
Furthermore, the price development of food also had an upward effect on inflation. This is mainly due to the price development of meat and vegetables. Food was 6.2 percent more expensive in March than one year previously. In February, food prices were up by 4.9 percent.
Euro area inflation continues to rise
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 11.7 percent more expensive in March than in the same month last year, up from 7.3 percent in February. In the first estimate on 1 April, the price increase was 11.9 percent. Inflation in the euro area rose from 5.9 percent in February to 7.5 percent in March. This is the highest inflation rate ever recorded in the euro area.
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.