EU car prices increased less than inflation last year

Prices for new cars in the European Union increased by 0.7 percent in December 2006 from the year before far less than the headline inflation rate of 2.1 percent over the year, the European Commission said Tuesday.

In major markets, the total cost of a new car including sales tax and registration taxes increased by 1.8 percent in Spain, 1.3 percent in Germany and 1.2 percent in France and Italy "always less than headline inflation," it said.

British prices hardly changed at all, at 0.2 percent.

The EU executive said car prices have tended to increase more slowly than other products in recent years, reports AP.

Cars are cheaper by an average 2 percent in the 10 countries that joined the EU in 2004, it said, but stressed that the gap between prices in wealthy western Europe and the poorer east are narrowing.

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