CBS (Statistics Netherlands) is making a significant change to how it calculates energy prices in the Consumer Price Index (CPI). According to the first quick estimate for June 2023, inflation is expected to be 5.7 percent. The CPI measures the percentage difference between the consumer price index in the current month and the same month in the previous year.
The new method for energy prices includes data from both new and current contracts with energy suppliers, providing a more accurate representation of what households actually pay for gas and electricity. The old method only used data from new contracts, which led to concerns about the accuracy of the CPI as energy prices were rising rapidly worldwide in 2021.
CBS began investigating the use of contract data from households with various energy suppliers in the spring of 2022. Preliminary results were published on October 31, 2022, and March 2, 2023. The investigation is now complete, and the new method can be introduced. The graphs show the results of this research, indicating the differences between the CPI and the survey series over the entire period studied.
The comparison clearly shows that the index of the survey series rises less quickly than the CPI from mid-2021. However, it continues to rise longer after the CPI falls again, resulting in different inflation rates. The cause of these differences lies in the extent to which short-term developments in the energy market affect the two series. The new method of measuring energy prices will be applied in the CPI from June 2023, replacing the old method.
Inflation in June 2023 will contain a “method break” due to the transition from the old method to the new method for energy prices. This break will remain in the inflation rate through May 2024. From June 2024 onwards, only the CPI with the new method for energy prices will be used to determine inflation, and there will no longer be a break.
For those using the CPI for indexing purposes, the introduction of the new method for energy prices will not impact its use for indexation purposes. The difference between the published inflation and what it would have been if the new method had been introduced earlier will disappear over a longer period. Thus, parties using the CPI for indexation can continue to do so after May 2023.