Food prices temper Dutch inflation

20/09/2004 10:00

With 1.2 percent, the Netherlands had almost the lowest rate of inflation in the European Union in August 2004. While Dutch inflation was well above the average for the Eurozone in 2001 and 2002, since 2003 it has been below this average.

Inflation in the Netherlands and the Eurozone

Inflation in the Netherlands and the Eurozone

Within the Eurozone inflation was only lower in Finland, namely 0.3 percent. Outside the Eurozone it was also lower in Denmark (0.9 percent).

Inflation in the EU (25), August 2004

Inflation in the EU (25), August 2004

Food and non-alcoholic drinks cheaper

The low rate of inflation in the Netherlands is mainly caused by the developments in prices of food and non-alcoholic drinks. Prices of these products fell by 5.2 percent between August 2003 and August 2004. In the Eurozone they cost 0.5 percent more in August 2004 than twelve months previously. There was a substantial difference for non-alcoholic drinks in particular: Dutch consumers paid 9.4 percent less for these products, while in other countries the prices remained more or less unchanged (-0.2 percent). The supermarket war in the Netherlands had an important effect on consumer prices.

Price increases per category, August 2003-August 2004

Price increases per category, August 2003-August 2004

Large differences

The largest price differences in both the Netherlands and the Eurozone were measured for the product group alcoholic drinks and tobacco. However, there are large differences in price developments between countries and between products in this category.

Alcoholic drinks cost less in the Netherlands in August 2004 than twelve months previously; beer prices fell by most ( -7.9 percent), but in the Eurozone prices remained at the same level on average. Prices of alcoholic drinks fell by most in Finland (-18.2 percent), and rose by most in Belgium (by 4.6 percent).

Tobacco products rose by relatively more in the Netherlands (18.8 percent) than in the Eurozone (+13.5 percent). Only in France (+29 percent) did prices in this category rise more strongly than in the Netherlands. In Finland prices of tobacco products fell (-1.6 percent).

Prices of alcohol and tobacco, August 2003-August 2004

Prices of alcohol and tobacco, August 2003-August 2004

Rent level rose more quickly in the Netherlands

Prices of housing and fuel and electricity rose slightly more strongly in the Netherlands than in the Eurozone between August 2003 and August 2004: in the Nederland by 2.9 percent, in the Eurozone by 2.7 percent. The amount of rent tenants had to pay in particularly rose more quickly: by 3.0 percent in the Netherlands, and 2.0 percent in the Eurozone. The price of heating and light rose at about the same rate in the Netherlands as in Eurozone. Electricity and gas rates rose by more in the Netherlands than in the Eurozone. On the other hand, domestic fuel oil cost 21 percent more in the Eurozone in August 2004 than twelve months previously, while this product hardly contributes to inflation in the Netherlands because it is used by only very few households.

Jan Walschots