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Dutch Inflation Highest In Nearly 5-1/2 Years After VAT Rate Hike

Dutch consumer price inflation accelerated in January to its highest level in nearly five and a half years, as the value added tax low rate was raised to 9 percent from 6 percent at the start of the year.

Inflation rose to 2.2 percent in January from 2.0 percent in each of the previous two months. Inflation was the highest since September 2013.

Similarly, the EU harmonized inflation rose to 2.0 percent from 1.8 percent in December, which was revised from 1.9 percent. In contrast, the euro area inflation eased to 1.4 percent in January from 1.6 percent in December.

The low VAT rate covers 22.5 percent of all consumer goods and services. The hike in the rate to 9 percent led to a rise in prices of food, books, public transport, and higher supply costs of gas and electricity.

Food inflation accelerated to 3.3 percent in January from 1.2 percent in December. Energy price growth climbed to 17.4 percent fro 13.5 percent.

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