Inflation remains limited, price level 1.2 percent higher than a year ago

Inflation remains moderate and price increases remain limited. Inflation was 1.2 percent in December, according to the first rapid calculation by Statistics Netherlands (CBS). This month, prices were 1.2 percent higher than in the same month last year.

The main reason why inflation remained limited was that prices rose sharply a year ago, largely due to higher fuel prices. The inflation rate is falling as gas and energy prices are falling again. In November, inflation was still at 1.6 percent.

If you take the fuel price increase into account, inflation is 3.4 percent. This rate has been falling for almost a year. An important role is played by the fact that food prices increased much less in December than in November.

Inflation in neighboring countries rose slightly again in December and was well above inflation in the Netherlands. The average price level is 3.7 percent higher in Germany and 4.1 percent higher in France.

According to December value, consumer goods and services inflation is at an average level of 3.8 percent in all of 2023. Inflation fluctuated significantly last year. In February, inflation was still at 8 percent. There was deflation in October (-0.4 percent). During deflation, the price level is lower than it was a year ago.

Statistics Netherlands’ inflation figures are slightly distorted due to a different energy price calculation method that Statistics Netherlands has used since June last year. Statistics Netherlands was calculating the price of new energy contracts, not the price of existing energy contracts. For a long time, the price of existing electricity contracts was lower than new electricity contracts for many households. Because of these energy prices, old inflation figures were exaggeratedly high. The new inflation figure is therefore more accurate, but it will take until June of this year for it to truly match daily life.

It also became clear yesterday that collective wages will rise sharply in 2023. On average, wages rose 6.1 percent, the biggest wage increase in 40 years. In 2023, the average wage increase was above the average inflation, but due to the change in the inflation calculation, the actual wage increase was -2.1 percent, that is, the average income loss. As a result, wages increased more slowly than prices.

Source: NOS