Inflation down to 1.4 percent in January

Statistics Netherlands’ latest consumer price index puts the rate of inflation in the Netherlands at 1.4 percent in January 2004. This is the lowest rate since October 1995. In December 2003 inflation was 1.7 percent.

Inflation according to the European harmonised consumer price index was 1.5 percent.

Prices slightly higher in January than in December

Consumer prices were on average 0.2 percent higher in January 2004 than in December 2003.

Consumers had to pay more for among other things fresh vegetables, electricity, motor fuels, community aerial systems and parking. Rates of consumption-related taxes (such as property tax, sewerage charges) and public services were also higher. Consumers are also having to pay more for child care and home care.

Clothes and shoes were cheaper: the January sales pushed down the prices of these items by 11.7 percent. In addition price decreases were reported for among other things bread, meat and non-alcoholic beverages.

Several causes for drop in inflation

The decrease in the rate of inflation has a number of underlying causes. Prices of a number of items did rise in January 2004, but by much less than in January 2003; for example gas, cars, food and drinks. In addition the effect of the January sales on the prices of clothes and shoes was much larger this year than last year. Lower prices for CDs and DVDs also had a downward effect on inflation.

A number of price increases tempered the fall in inflation, though; mainly electricity rates, car fuels, contributions for child care and home care, and the increase in rates of consumption related taxes and public services.

Inflation also down according to European index

Dutch inflation according to the European harmonised norm fell from 1.6 percent in December 2003 to 1.5 percent in January 2004. This is the lowest value since February 2000. Eurostat, the European statistical office, estimates inflation in the Euro area at 2.0 percent in January.

Dutch inflation according to the HICP fell by less than inflation according to the national consumer price index. This is because the price developments of health care costs are approached differently by the two series. From January 2004 a number of provisions are no longer covered by health fund insurance or the extraordinary medical costs scheme. In the European HICP this results in an increase in inflation by 0.4 of a percent point, while in the national CPI it has no effect at all.

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