Per January 1 this year, low rate VAT was increased from 6 to 9 percent. This has had a massive influence on retail prices for things such as groceries, books and public transport. According to Statistics Netherlands (CBS), consumers paid 2,2 percent more in January than they did during the same period the previous year, the biggest price increase since September 2013.
More than 20 percent of consumer goods and services fall under the low VAT tariff; things such as going to the hairdresser, gym subscriptions, car fuel, groceries and insurance premiums are all subject to low VAT. Groceries, in particular, have become more expensive, increasing by 3,3 percent in price in January, compared to January last year.
Higher taxes and higher supply costs for gas and electricity have also contributed to the upward pressure on consumer prices, with energy costing on average 17,4 percent more than the same period in 2018. Gas was namely 15 percent more expensive and electricity was 20 percent more expensive than last year.
There were a few things, however, that had a somewhat downward effect on the consumer price increase. These were namely domestic care and plane tickets, amongst other things. One of the reasons for the downward effect produced by domestic care is the fact that the personal contribution aspect for this type of care has been reduced.
According to the European harmonised consumer price index, which doesn’t take into account certain living costs, prices in the Netherlands increased by 2 percent in January compared to the same period last year. This increase is greater than the Eurozone average of 1,4 percent during the first month of 2019.