Inflation 1.7 percent on average in 2005

12/01/2006 09:30

Inflation in the Netherlands was 1.7 percent on average in 2005. This is 0.5 of a percent point higher than in 2004, when consumer prices were 1.2 percent higher than one year previously on average. The increase was caused by prices of energy products. In December 2005 inflation was 2.0 percent according to Statistics Netherlands consumer price index (CPI).

Inflation according to the European harmonised method (HICP) was 1.5 percent on average in 2005. In 2004 it was 1.4 percent.

Energy prices main factor in inflation in 2005

Consumer prices in the Netherlands were 1.7 percent higher on average in 2005 than in 2004. Just as in 2004, inflation was low from a historical point of view. The years 2004 and 2005 are the only years since 1990 in which inflation remained below 2.0 percent.

A large part of inflation in 2005 was caused by price increases of energy products. Higher prices of gas, electricity and motor fuels contributed 1.0 percent point to the 1.7 percent inflation. Net price increases and decreases of other goods and services accounted for 0.7 of a percent point. In 2004 on the other hand, only 0.4 of a percent point of inflation was accounted for by energy products and 0.8 of a percent point by other goods and services.

The effect of the supermarket price war diminished in 2005. Food and non-alcoholic drinks were on average 1.2 percent cheaper than one year previously. In 2004 these products were 3.5 percent cheaper. Crop effects also played a part in the smaller price decreases for food products in 2005.

Prices of clothes and shoes, and communication on the other hand fell by more in 2005 than in 2004. The increase in rates of consumption taxes and government services was also smaller than in 2004.

Inflation in December 2.0 percent

Inflation was 2.0 percent in December 2005. This is 0.2 of a percent point higher than in November, when prices were 1.8 percent higher than twelve months previously.

The increase in inflation in December was mainly caused by prices of clothes and shoes and motor fuels. For clothes and shoes, the shopping pattern deviated in December 2004, resulting in lower than normal prices in the sales season. In December 2004, prices of motor fuels also fell sharply.

Inflation according to European method 1.5 percent

Dutch inflation calculated according to the European harmonised method (HICP) was 1.5 percent on average in 2005. In 2004 it was still 1.4 percent. The higher inflation rate in 2005 was mainly caused by large price increases for energy products. The yearly average for the EU and the Eurozone have not yet been released.

The difference in inflation according to the HICP between 2004 and 2005 is smaller than that according to the CPI. This is caused by the reduction of the national health insurance package in January 2004, which meant that people insured under this scheme had to pay for more care items themselves. This contributed to the HICP but not to the CPI in that year,.

Dutch inflation according to the HICP was 2.1 percent for December 2005. In November it was only 1.6 percent. The harmonised inflation rate rose more strongly in December than inflation according to the CPI. This is because the developments in prices of shoes and clothes and of motor fuels have a larger effect in the HICP than in the CPI. Eurostat, the statistical office of the EU, expects inflation in the Eurozone to fall slightly in December to 2.2 percent. In November Eurozone inflation was 2.3 percent.