Limited measurement problems in the Netherlands
The coronavirus pandemic has affected inflation in several ways. In particular the measures taken to contain the virus caused measurement problems in the statistical offices. In April, no prices could be observed in the HICP index for 13% of goods and services in the Netherlands. This mainly concerned the prices for services such as airline tickets, hospitality and cultural services and hairdressers. In many other countries, the percentage of unobserved prices was much higher. Many shops were closed in France, Italy and Spain, which meant that prices for clothing and shoes could not be properly recorded. For the euro area as a whole, 32% of prices had to be estimated in April. This was usually done by applying the 2019 April price trend also to 2020, or by keeping prices at the same level. In June and July the situation improved, and only 1% of the prices for the products in the HICP basket had to be estimated in the Netherlands.
Corona has also changed the composition of consumption. For example, much of the consumption in the hospitality industry fell away as more people enjoyed their meals at home instead of in a restaurant and the number of international travels fell sharply. As agreed at European level, the weights of the various goods and services in the HICP are only adjusted once a year. Therefore, the weights used for the HICP do not reflect the changed consumption pattern.
Chart 1 - Higher inflation rate for estimated items