Lowest inflation rate in fifteen years

07/10/2004 09:30

Dutch consumer prices were on average 1.0 percent higher in September 2004 than in September 2003. This brings the inflation rate down to the lowest level since June 1989, according to the consumer price index by Statistics Netherlands. Compared to August 2004 the inflation rate was down by
0.1 percent point. This decrease was caused by price developments in food, clothing, flowers and plants.

Also the inflation rate according to the European harmonised method fell by 0.1 percent point in September, reaching 1.1 percent.

Inflation rate in September 1.0 percent

The inflation rate in September fell to 1.0 percent. This makes it the lowest inflation rate since June 1989. The highest levels over the last fifteen years were observed late in 1991 and in the spring of 2001, when the inflation rate was 4.9 percent. The average inflation rate over the last fifteen years was 2.6 percent.

The historically low inflation rate is mainly due to the major price drop in food and soft drinks over the last twelve months. Between September 2003 and September 2004 they became 5.7 percent cheaper. Potato prices fell sharply by 31.8 percent. Eggs became 27.0 percent cheaper and fresh vegetables 20.2 percent. Statistics Netherlands never published such a strong decrease in food prices before in its consumer price index since the Second World War

Price developments of food and clothing lower the inflation rate

Although there have been price increases from September on August 2004, these were not as high as in the same period of 2003. This resulted in a lower inflation rate. The September on August price increases in clothing, shoes, fresh vegetables, flowers and plants were lower than in 2003.

The slowdown of the inflation rate, on the other hand, was levelled off by price developments in car fuels. Although the prices did not change between August and September this, car fuel prices fell during the same period last year. In September car fuels were 11.3 percent more expensive than in September 2003. In August this was 9.3 percent.

Dutch inflation rate well under Eurozone average

The Dutch inflation rate according to the European standards was 1.1 percent in September 2004, down 0.1 percent point on August. Eurostat, the European statistical bureau, also expects a 0.1 percent point drop in the Eurozone inflation rate in September, bringing it to 2.2 percent.

In August the Dutch inflation rate was 1.2 percent by European standards, the second lowest in the Eurozone after Finland. The other Eurozone countries had inflation rates of 2.0 percent or more. The comparatively low Dutch inflation rate is mainly due to the lower food prices in the Netherlands.

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