Consumer price index, 15 December 2006

CPI was 117.7 (1998=100) in 2006, compared to 115.1 in 2005, an annual growth rate of 2.3 per cent. The CPI was 118.5 in December 2006 - a decrease of 0.4 per cent from November. The annual growth rate for CPI adjusted for tax changes (CPI-AT) was 2.0 per cent.

In December 2006 the CPI was 118.5, an increase of 2.2 per cent in the last 12 months. The year-to-year growth in CPI-ATE was 1.0 per cent in December 2006.

High prices of electricity affected the annual growth rate in 2006

There was a strong increase in electricity prices in 2006, while the cost of electricity transport was almost flat in the same period. There were strong prices increases from January to April 2006, and the increase was strongest in February and April. In April 2006, the prices of electricity were 35.8 per cent higher compared with the same period the year before. In the following months, electricity prices fell, which picked up again in the late summer. The prices of electricity increased with 21.0 per cent from August to September 2006, and were 48.1 per cent higher compared to September 2005. Towards the end of the year, electricity prices fell a bit, but the level of prices in December 2006 is quite high compared with the same period in 2005. Total electricity prices, including the costs of electricity transport, increased by 28.0 per cent from 2005 to 2006. CPI excluding electricity increased by 1.3 per cent from 2005-2006, while total CPI increased by 2.3 per cent.

The Consumer Price Index in 2006 was also dominated by high petrol prices. In July 2006, petrol prices were 11.1 per cent higher compared with the same period the year before, after increasing from the turn of the year in 2005/2006. From August to November, prices fell strongly, and increased softly in December. Annual growth of petrol was 8.0 per cent from 2005 to 2006. CPI-AE increased by 1.0 per cent from 2005 to 2006.

Strong price growth in hotel- and health services

Most of the services had a stronger annual growth rate compared to the total annual growth. However there were also strong price decreases in some services. On an annual basis, there was a strong price increase of 8.4 per cent for hotel services. There was an annual total price increase of 7.2 per cent for health services, while annual prices in recreation and culture rose by 5.7 per cent in 2006. Prices for social services fell by 11.7 per cent from 2005 to 2006, and lower kindergarten fees was the most important factor in the decrease. From 2005 to 2006, prices in telephone services decreased by 2.9 per cent

Lower prices in clothing were the most significant single factor which dampened the consumer price growth in 2006, but audio-visual equipments also pulled down the price growth. Clothing prices has been falling in recent years. The prices of clothing continued to fall in 2006, but the decrease was not as strong. Clothing prices was reduced by 3.8 per cent from 2005 to 2006. Audio-visual equipments have showed a consistent negative price development for many years now. We have to go back to 1993 to find a positive annual growth rate. Prices for audio-visual equipments fell by 7.8 per cent from 2005 to 2006.

From January 1, 2006, a new ceiling for kindergarten fees was enforced. This resulted in a strong fall in kindergarten fees. At the start of 2006, the value added tax for industries increased form 11 to 13 per cent, and at the same time the lower level value-added tax increased from 7 to 8 per cent. There were also increases in other special taxes of about 1.8 per cent. Lastly, there was an 8 per cent value-added tax on rentals of hotels and cottages from September 2006. Tax changes contributed 0.3 percentage point to the CPI growth from 2005 to 2006.

Electricity prices dropped from November 2006 to December 2006

The CPI fell by 0.4 per cent from November to December 2006. The decrease is due to lower tariffs on electricity, and a drop in prices of clothing, food and non-alcoholic beverages.

Electricity prices fell by 9.9 per cent, but the prices of liquid fuel and heat energy also showed a decrease from November to December. The prices of solid fuel were almost unchanged. Clothing prices registered a decrease of 1.3 per cent, while there was a slight increase in footwear prices. Food prices declined by 0.4 per cent, while the prices of non-alcoholic beverages fell by 2.7 per cent.

Increase in prices of telephone equipments was the most important factor that contributed to dampen the decrease in the CPI.

The year-to-year growth of the CPI fell, while the CPI-ATE rose

The year-to-year growth in CPI was 2.2 per cent in December 2006, down by 0.4 percentage points from a growth of 2.6 for the last twelve months in November 2006. A slight drop in the tariffs of electricity in December 2006 compared to the same period last year explains the fall in the year-to-year growth in the CPI.

The year-to-year growth in CPI-ATE was strengthened with 0.2 percentage points in December, from 0.8 percent in November to 1.0 per cent in December.