Inflation in our country is falling faster than expected, and that’s a good sign, thinks BNR in-house economist Han de Jong. Whether the peak is really passed depends on one thing: the price of energy.
According to the harmonized European index of consumer prices, inflation was 11.2% in November, compared to 16.8% in October. “This decline is very sharp, larger than expected and even larger than in the countries around us, while here too the figure has increased faster,” says De Jong. “But the peak seems to have ended.”
Rising gas prices could still throw a wrench in the works, says De Jong. “That price went up six percent again yesterday and that’s annoying.”
Many details were not disclosed by CBS, says De Jong. But it is clear that the decrease is reflected in the multiple components that determine the figure. “This is good news.” Incidentally, the 190 euros for the energy bill does not play a role in this declining figure, says De Jong. “This is seen as income support, not a measure of price.”
What will the ECB do?
The question now is what the ECB will do. Eurozone-wide inflation data will be released later today. President Klaas Knot of De Nederlandsche Bank and member of the executive board of the European Central Bank has repeatedly stated that interest rates should be raised until inflation really comes down. “I don’t think he expected this sharp drop,” says De Jong. The ECB can only slightly reduce the rate of interest rate hikes.
“There is a battle between hawks and pigeons within the ECB,” says De Jong. ‘Pigeons had the upper hand until the summer and managed to curb interest rate hikes. Since then the Hawks, including Klaas Knot, have always been in control and I don’t think they will be giving it up any time soon.’
Dutch figures
Based on European data, inflation in the Netherlands will also show a sharp decline according to the national calculation method. This figure will arrive on December 8 and could easily fall below 10%, thinks De Jong. ‘It’s still huge, but a lot less. And here, too, the caveat of the high gas price applies. Can throw a wrench in the works.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
