Consumer Price Index (CPI)

Definition

The Consumer Price Index (CPI) tracks the average change over time in the prices paid by households for goods and services and is published in the Netherlands by Statistics Netherlands (CBS). Contracts frequently tie annual price adjustments to a named CPI figure so that the agreed price keeps pace with inflation. Choosing the correct index series and reference month is essential to avoid disputes.

Example

A lease provides that rent rises each January in line with the CBS CPI for all households over the preceding calendar year.

Why this is a business risk

Contracts that reference the CPI without specifying the exact series, reference month or calculation formula create disputes every time an adjustment falls due. In periods of high inflation the financial impact of getting the index wrong is significant. Landlords and tenants, or buyers and suppliers, can reach entirely different figures from the same underlying data if the clause is ambiguous.

How to manage it

• Name the exact CBS index series (e.g. CPI all households, derived or undivided) and the reference month in the contract clause.
• Specify the calculation formula: percentage change from reference month in year N-1 to reference month in year N.
• Set the adjustment date and agree what happens if CBS revises a published figure after the adjustment has been applied.
• Consider whether a cap or floor on the annual adjustment is appropriate, especially for long-term agreements.
• Diarise the adjustment date in your contract management system so the new price is calculated and communicated on time.