Inflation in the Netherlands fell sharply in March to 4.4%. “Partly because of lower energy prices,” says Peter Hein van Mulligen, chief economist at Statistics Netherlands. “And if they stay where they are now, it’s entirely possible that we will face negative inflation in the second half of this year.”
The reason for the drop in inflation is clear to CBS economist Van Mulligen. He refers to a year ago, when other goods and services had also become significantly more expensive as a result of high energy prices. Now it seems the opposite is happening. ‘Energy prices peaked six months ago and then fell sharply. Now we see it reflected in the prices of other goods and services.
Precisely because of this trend, the CBS economist calls the outlook positive. “So you can just see how it compares to last year.” In fact, he wouldn’t be surprised if inflation turns negative later this year. “If energy prices stay where they are now, but that’s a big ‘if,’ then we are very likely to see negative inflation in the second half of this year.”
‘Energy prices peaked six months ago and then fell sharply. So now we see it reflected in the prices of other goods and services.’
Core inflation is unlikely to rise further
According to Van Mulligen, the European Central Bank’s (ECB) interest rate weapon has also undoubtedly helped, “but we can’t deduce what percentage point is due to this and what has a different cause.”
There should be more clarity on the cost of living on April 13 when core inflation is announced, i.e. inflation without products that can fluctuate greatly in price, such as food and energy. Van Mulligen: ‘I suspect it hasn’t increased further. And this has been the biggest concern in recent months, especially for central banks.’
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.
