In particular, developments in energy prices, such as electricity, gas and district heating, contributed to high inflation in 2022. “Energy prices are very dominant, we spend just under six percent of our total energy spending package, but prices were responsible for nearly half of that ten per cent inflation.That was the main driver, luckily energy prices are now coming down,’ says De Jong.
Even food and fuel were more expensive. Food cost 10.8% more than twelve months earlier. In 2021, food prices fell by 0.2%. The increase in food prices was mainly caused by meat, dairy products, bread and cereals and vegetables. ‘Everyone has to eat, it’s hard to cut it.’ According to De Jong, these prices continue to rise and this is cause for concern, but ‘we know that food prices often follow energy prices with a certain lag. Hopefully they will roll over in the course of 2023.
Bad news
Dutch industry contracted in November for the first time in more than a year and a half. Production fell hardest in the chemical industry. Manufacturing companies produced 0.2% less last November than in the same month of the previous year. It was the first time since February 2021 that production decreased on an annual basis. Compared to a month earlier, the manufacturing industry contracted by 2%. “This is bad news,” says De Jong.
“Dutch industry output grew strongly during 2022. Remarkable, because in Germany this was not the case. Usually our industry is keeping up with Germany, which hasn’t happened for a year or two. Now you see it decrease, it is especially the energy-intensive sectors where production is declining sharply.’
Mechanical Engineering
Production was not inferior in all branches of industry. For example, companies that manufacture, install or repair machines have grown rapidly. Half of the industrial branches have shrunk. Manufacturing entrepreneurs became a little more optimistic in December. They are particularly more positive about the amount of work in the near future. Another factor is that entrepreneurs from German industry, which form an important sales market for Dutch companies, are less gloomy than before.
De Jong doesn’t think we will see a strong recovery in production in energy-intensive sectors anytime soon due to high energy prices, but he hopes many things will normalize. Energy prices have driven up inflation, but global logistical disruptions have also contributed significantly. De Jong mentions the prices of large household appliances from which he reads that inflation is starting to fall there. “These are signs that logistical disruption around the world is decreasing.”
Fuel prices
Motor fuels were 18.1% more expensive than a year earlier, in 2021 the price trend was 16.8%. A liter of petrol cost an average of €2.07 in 2022, compared to €1.82 in 2021. The price of a liter of diesel was €1.96, compared to €1.46 the previous year.