Ministers have agreed to reduce taxes on fuel and energy in an effort to shore up spending power following mounting inflation.

They have also agreed to increase the one-off payment to low income families from €200 to €800, social affairs minister Karien van Gennip said after Friday’s cabinet meeting

‘The Netherlands is becoming poorer because what we are buying is more expensive,’ Van Gennip said. ‘We cannot compensate everyone, so we are focusing on families with low and medium incomes.’

In particular, the tax on fuel will be reduced by 17 cent per liter for lead-free petrol and 11 cents for a liter of diesel from April 1. Value added tax on gas and electricity will be cut from the 21% high rate to 9% from July 1.

In total, the package will cost the treasury €2.8 bn and will run for at least six months.

National statistics office CBS said on Thursday that inflation had reached 6.2% in February, and the government’s macro-economic think-tank has said spending power will drop by an average of at least 2.7% in 2022, thanks in part to rising energy prices.

Around half the cost of petrol in the Netherlands is down to tax, as is 40% of the cost of diesel.