Inflation substantially down in August

For the third month in a row, Dutch inflation dropped. The rate fell to 1.1 percent in August, i.e. 0.4 percentage points down on July. Inflation is calculated from the increase of the consumer price index (CPI) relative to the same month one year previously.

The decline of inflation is mainly caused by price changes for flowers and plants, fresh vegetables and clothes. While prices of fresh vegetables, flowers and plants rose considerably in August 2006 compared to July, they dropped in August. On average, prices of flowers and plants fell by approximately 6 percent, prices of fresh vegetables by approximately 4 percent. Clothes, on the other hand, became 5.6 percent more expensive in August compared to July, but the price increase is much more moderate than in August 2006 relative to July 2006.

With 0.4 percentage points, last year’s increase in the costs of housing, water and energy contributed most to inflation in August. The contribution of various goods and services, like insurances, was 0.3 percentage points, just like in the preceding months. Communication services, e.g. telephone services and use of the Internet, reduced inflation by 0.1 percentage points. Recreation and culture also had a downward effect on inflation of 0.1 percentage points.

The harmonised consumer price index (HICP) allows comparison between the member states of the European Union. According to the HICP method, Dutch inflation was 1.1 percent in August, 0.3 percentage points below the rate of July. Inflation in the eurozone was 1.7 percent in August, 0.1 of a percentage point down on July. Dutch inflation is currently far below the eurozone average.

Dutch inflation