- Inflation rate at 0.9 percent in June
- Clothing, holidays and airline tickets have upward effect on inflation
- Gap between Dutch and eurozone inflation rate narrowing
Today Statistics Netherlands announced that the inflation rate over June 2014 was 0.9 percent, i.e. marginally higher than in May. Clothing prices in particular had an upward effect on inflation. Smaller price cuts during the June sales also played a part in this respect. Higher prices for holidays and airline tickets also contributed to the increase.
Inflation rate remains low
Inflation rose marginally in June following a decline in May. Currently, the level of inflation is much lower than last year, when tax measures pushed inflation up. Since early 2014, the rate has varied around 1 percent. The last time the rate reached such a low level was in 2010.
Smaller price cuts clothes during summer sales
Each year, clothing prices fall during the sales in June. The price cuts were less substantial as a result of the combination of more new fashion collections, better stock management and the implementation of a more active customer policy. On average, clothing prices fell by 0.5 percent relative to June 2013, but, on an annual basis, the price fall was smaller than in May. Prices developments for airline tickets and holidays also contributed to the higher inflation rate. Around the Whitsun weekend, holiday and airline ticket prices are traditionally higher. This year, the Whitsun weekend was in June, last year in May.
Food prices down, petrol prices up
Consumers spend a considerable part of their budget on food products. In June, average food prices - especially potato, vegetable and fruit prices - were below the level of June 2013. Last year, poor crops jacked food prices up, but dairy prices were substantially higher than one year previously.
The price of petrol, another important cost item for consumers, was also higher than one year previously due to higher crude oil prices.
Inflation rate in the Netherlands below eurozone level, but gap is narrowing
The European harmonised price index (HICP) is used to facilitate comparison between the various EU countries. A major difference between inflation calculated according to Dutch method and the HICP is that costs related to home ownership are not incorporated in the HICP. In June, the Dutch inflation rate calculated according to the HICP method had risen to 0.3 percent, which is below the average eurozone level of 0.5 percent, but the gap is narrowing. According to the ECB, prices are stable if the inflation rate is close to 2 percent. The eurozone inflation rate has been below the 2 percent level since February 2013.