Despite the fact that the Dutch inflation rate is “still high”, we can be “extremely happy” that it has started to decline, says economist Edin Mujagic. “If you had 11.2 percent and the month before 16.8 percent, then that’s not that bad of a margin.” However, he expects a strange situation to happen in 2023, because only then will many people feel the high prices.
The main cause of the decline is the price of energy. ‘At some point you will get help from math. To keep inflation under pressure, energy prices have to rise continuously,’ explains the economist. ‘But we all know that these have come down in recent months and at some point, at the end of this year as it looks now, the statistical effect is favorable for inflation. Now you can see it very clearly.”
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However, a high rate of inflation remains, even without energy prices. ‘When we talk about energy, we have to talk about the two hits you get with inflation. The direct hit with rising oil, gas and electricity prices. And the second shot follows in slow motion. Because the price increase is slowly reaching households and businesses, who are passing it on little by little.’
Mujagic thinks the first shot has passed. “We have it behind us. Now comes the slow motion effect. If you add these two figures, there will be downward pressure on inflation. But inflation remains high and it’s becoming more and more evident in more of the things you deal with every day.’
The gas problems are back
Although the inflation rate has now decreased slightly, Mujagic warns of a particular situation that could arise in 2023. ‘You will therefore read in the media that inflation is falling very rapidly, but that many people will only then notice the high inflation figures of now. Then it clearly reflects in the things you deal with every day, like food.’
The economist also expects the gas problems to return in 2023. Now prices are falling again, but this is largely due to the fact that gas depots are full. But after the winter, stocks will probably have declined considerably and will need to be replenished before next winter. “We managed to do it this year with gas from Russia, next year you won’t have that gas anymore.” So EU member states will have to find new supply routes and that could lead to a battle, Mujagic expects.
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.
