Lowest inflation rate since 1989

According to Statistics Netherlands’ consumer price index, the inflation rate stood at 0.9 percent in October 2006, the lowest result since March 1989. In September, consumer prices were 1.1 percent higher than one year previously.

Low inflation rate largely due to government measures

In the first ten months of 2006, inflation was evidently below last year’s level. This is largely due to a number of measures taken by the government early 2006. Abolition of the part of the property tax to be paid by users, the reduction of excise duty on liquor and a lower parental contribution to childcare helped to reduce inflation.

Vegetable and fruit prices contribute to lower inflation rate

Since July, prices of motor fuels fell by almost 11 percent. This results in a price cut by 8.1 percent compared to one year ago. The drop in motor fuel prices is an important factor to keep inflation down.
A further decrease was slowed down by soaring prices for vegetables and fruit in August and September, but in October there were considerable price cuts for vegetables and fruit. In October, prices of fresh vegetables were 9.3 percent up on one year ago, but in September the price gap was no less than 33.2 percent.

Inflation largely caused by housing costs

Currently, inflation is mainly caused by rents and gas and electricity prices. Consumer prices for gas and electricity always respond with some delay to oil prices on the global market and thus contribute substantially to this year’s inflation rate.

Inflation according to European method down to 1.3 percent

Dutch inflation according to the European harmonised method (HICP) stood at 1.3 percent in October 2006, i.e. 0.2 percentage points down on last month. In the last couple of months, the inflation rate in many other European countries has also been on the decline. Eurostat estimates inflation in the eurozone in October 2006 at 1.6 percent, as against 2.3 percent in August. For some time now, the Netherlands has been among the countries with the lowest inflation rate in the eurozone.