After a period of decline and despite the measures taken by the European Central Bank (ECB), inflation in France and Spain has picked up again. Inflation data for the Netherlands and the eurozone will be announced later this week. There is a possibility that these figures will also show an increase, says BNR in-house economist Han de Jong. High food prices, in particular, are getting in the way.
Inflation in France and Spain rose by 6.2 and 6.1 percent respectively, after declining further in January. Core inflation excluding energy and food prices has also increased further, says De Jong. “What you see in all the numbers is that inflation for food continues to rise.”
Yesterday it was announced that although inflation has decreased in Belgium, food prices have risen by more than 17%. In France, the increase was 14%. “Those percentages are extremely high.”
Bad weather
Bad weather around the Mediterranean Sea, where many vegetables are grown, and high gas prices may have something to do with it. “This has also made it more expensive to heat greenhouses in the Netherlands,” says De Jong.
On Thursday, Statistics Netherlands (CBS) is to announce the Dutch inflation figure. On that day, the European statistical office Eurostat will also publish the data for the Eurozone. According to De Jong, it could be that the Netherlands follows the example of France, Spain and Belgium.
‘But perhaps more importantly, financial markets will see this as a huge setback. They will anticipate further interest rate hikes from the European Central Bank, which will raise interest rates again.’
Government loans
European Central Bank President Christine Lagarde will announce a new interest rate decision on 16 March. According to De Jong, “significant interest rate movements are underway.” For example, the Dutch 10-year interest rate is above three percent for the first time since 2011, for a two-year government bond the rate is 3.2 percent, “the highest level since 2008”.
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.
