Inflation down, rent increase historically low

09/08/2007 15:00

According to the consumer price index published by Statistics Netherlands, Dutch inflation was down to 1.5 percent in July 2007. This is 0.2 percentage points lower than in June, when consumer prices were on average 1.7 percent up on one year previously. Lower energy prices and a modest rent increase largely account for the low inflation rate.

Dutch inflation according to the European harmonised method dropped to 1.4 percent in July, a decrease by 0.4 percentage points relative to June.

Rent increase historically low

The average rent increase was 1.4 percent in July. Such a low increase has not occurred since 1959. In July 2006, the rent increase averaged 2.7 percent.  For the majority of tenant-occupied houses, the minister of Housing, Spatial Planning and the Environment disallows a rent increase of more than 1.1 percent this year. A higher rent increase is only allowed for a small proportion of houses, which causes the average rent increase to exceed 1.1 percent. The very modest rent increase has a downward effect on inflation of 0.2 percentage points.

Decrease gas price unprecedented since January 1993

Gas and electricity became cheaper in July. The gas price dropped considerably. The gas rates for consumers were reduced by an average 5.6 percent relative to June. Such a huge price decrease is unprecedented since January 1993. Lower prices for gas and electricity have a downward effect on the inflation rate of 0.25 percentage points.

Motor fuels also became cheaper in July. The price of motor fuels is currently below the level of twelve months ago and accounts for a downward effect on inflation of 0.1 percentage points.

Consumer pays more for vegetables, flowers and plants

The decrease of the inflation rate is restrained by a price rise for fresh vegetables, flowers and plants in July. Last year these products became cheaper in July.

Prices of clothes and shoes, which rose by 4.8 percent in July relative to one year ago, pushed up the inflation rate. Last month, the price difference was 2.9 percent.

Inflation rate in the Netherlands lower than in the eurozone

Dutch inflation according to the European harmonised method (HICP) was 1.4 percent in July. In June, inflation in the Netherlands according to the HICP was 1.8 percent.

According to a preliminary estimate by Eurostat, the inflation rate in the eurozone was 1.8 percent in July, so inflation in the Netherlands is below the average level in the eurozone.