Does the decline in inflation in several countries also mean that inflation in the euro area has peaked? Germany, as well as Spain and Belgium, recorded positive data today. “You have to start somewhere,” says Bert Colijn, senior economist at ING.
“It’s too early for the hosanna, but a decline has long been imminent,” says Colijn. “Energy prices have been falling for a while and at some point that should translate into lower consumer prices.”
European figures
Inflation data for the Netherlands and the Eurozone will be announced on Wednesday. Earlier this week, ECB chief Christine Lagarde said she did not expect inflation to spike. ‘There is too much uncertainty, especially in the area of high energy prices passed on to consumers, to assume that the peak has already been reached. I’d be surprised,” Lagarde said.
Colijn also thinks more is needed for real change. ‘You don’t know what’s going to happen in energy and that’s a very dominant factor in the inflation rate. But if that price stays low, the peak could be slowly behind us.’ Inflation in Spain is down for the fourth consecutive month, more than expected. The fact that the inflation rate is also decreasing in Germany has a lot to do with energy prices, says Colijn.
Signs of change
Colijn sees that the pressure is starting to ease in various places. ‘Companies are still passing the higher costs onto consumers. But the demand for goods is declining. There are fears of a recession causing people to spend less and businesses can’t keep going by. At the same time, we see the price of containers, which was in the news a lot last year, is going down. These are all signs of a slight turnaround.
The question is whether the Netherlands will also show a declining figure, says Colijn. “But if many other countries are showing a declining figure, then there’s a good chance this also applies to the Netherlands.”
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.
