Dutch inflation, interest rates lowest in over 25 years

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Inflation in the Netherlands decreased to the lowest level in 27 years in January, with the average price increase coming out at exactly 0 percent. The average interest rate also decreased to 0.5 percent in January (0.8 percent in December 2014), the lowest since the start of De Nederlandsche Bank's (DNB) time series in mid 1986.

The main reason for the decrease in inflation last month was the motor fuels prices. The price of oil fell to just under 50 dollars per barrel and the price of gasoline fell to an average of 1.47 euros per liter, almost 13 percent cheaper than the same month last year. Gas was also cheaper in January, 2.8 percent lower than last year.

The prices of food and clothing also had a downward effect on inflation, Statistics Netherlands reports. There was less demand for winter clothing due to the mild weather, which caused stores to mark down their prices. Food was also sold with higher discounts in supermarkets.

The European Central Bank (ECB) is very concerned about the low inflation in the eurozone. Prices in the euro area decreased in January for the second consecutive month. Because of this consumers delay making purchases because they expect that everything will become even cheaper. This delays the economy. From next month the ECB will pump billions into the European economy, partly because of the low inflation.

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