Inflation rate considerably down

07/11/2013 15:00

The inflation rate in the Netherlands dropped further in October to 1.6 percent, the lowest rate in three years. In September, the inflation rate was 2.4 percent. Inflation is defined as the increase in the consumer price index (CPI) in a particular month compared to the same month in the previous year.

The dramatic drop in inflation can largely be attributed to tax measures. On 1 October 2012, the highest VAT rate was raised from 19 to 21 percent. This had an upward effect on inflation during the past year, but the effect has worn off by now. Petrol and food prices also had a downward effect on inflation.

Dutch inflation rate

Dutch inflation rate

The harmonised consumer price index (HICP) allows comparison between the inflation rates in the various member states of the European Union (EU). The level of inflation in the eurozone is one of the main guidelines for the European Central Bank (ECB) to change or refrain from changing the interest rate. According to the ECB, prices in the eurozone are stable, if the inflation rate is close to 2 percent.

According to the HICP method, inflation in the Netherlands was 1.3 percent in October, i.e. nearly twice as high as the average rate across the eurozone. Eurostat, the European statistical office, calculated an inflation rate for the eurozone of 0.7 percent in October.

Dutch inflation according to HICP

Dutch inflation according to HICP

More figures can be found in the Business cycle dossier.

For more information on economic indicators, see the Economic Monitor.