Inflation drops to 1.3 percent in January

The inflation rate in the Netherlands was 1.3 percent in January 2006. This is a sharp drop from December, when prices were 2.0 percent up. Inflation is measured as the change of the consumer price index compared with the same period twelve months previously.

The drop in inflation was largely caused by the abolition of the “user” component of the property tax. This measure contributed 0.5 of a percent point to the decrease. Also the parent contributions to the cost of child care reduced. This contributed for about 0.2 percent point to the inflation drop.

Besides above mentioned measures also the development of energy prices had a downward effect on the inflation. As usual in January the tariffs for gas and electricity rose significantly compared to a month before. However, in January this year the price increase was smaller than in January 2005. 

To allow Euro-zone comparisons, inflation is calculated according to a seperate harmonised method as well. In this calculation the property tax is not counted. According to the harmonised method Dutch inflation was 1.8 percent in January 2006. In December it was 2.0 percent. The Euro-zone inflation rose by 0.2 percent point in January and was estimated at 2.4 percent.

According to the Consumer Confidence Survey almost six in ten Dutch consumers believed that prices have risen either moderately or strongly in the past twelve months. The part of consumers expecting an equal or stronger rise in consumer prices in the coming twelve months increased in recent months and counted 56 percent in January.