And that sounds great, says BNR in-house economist Han de Jong. But there is one caveat to note. “The fact that inflation has dropped from 8 to 4.4% is entirely due to lower energy and fuel prices,” says De Jong. ‘Because if you leave that out – as reported by Statistics Netherlands – inflation in March will be 8.1%. Exactly the same February issue.’
“The fact that inflation has fallen from 8 to 4.4 percent is entirely due to the decline in energy prices”
Point out that it’s nice that there’s a drop, but that energy prices have been down month-to-month. And that was only possible because energy prices rose so much in March of last year because of the war.
Food and beverages
Where energy prices have fallen sharply, ordinary groceries have become more expensive, says De Jong. People are now paying 18 percent more for the average shopping cart than they were a year ago, and that figure is also the same as it was in February.
The United States also presented inflation data yesterday, and according to De Jong there is also some disappointment in those data. “Food inflation in the US has been down for weeks and is now at 8.5%,” he says. “But he won’t go down with us.”
And that actually applies to all countries in the Netherlands, says De Jong. In Germany, for example, it is even more serious: over 22 percent inflation on foodstuffs. “And we’re talking about 16 percent among the French and 17 percent among the Belgians,” he continues. “So we’re pretty much on the same level as the countries around us.”
Vision of the future
De Jong also does not foresee a drop in inflation in the coming months, because there are too many components where there is no movement. “So it’s pretty persistent,” he says. “If you look at last year’s model now, you immediately notice that there was a sharp drop in prices in the period from April to June.”
“Inflation is pretty stubborn”
According to De Jong, this in turn means that inflation will have great difficulty this year to fall further over the same period. While the prices rocketed up in the following period. “And then I expect inflation to fall sharply around the same time this year.”
Warning
De Jong also immediately launches a warning regarding the price of oil, which returned to rise last month. “The emergence of the banking crisis in the US last month immediately caused turmoil and stoked fears of a recession,” he says. “That drove the price of oil down.”
For example: during the now stifled banking crisis, a barrel of Brent oil cost around $70, but now it’s already $87. “That’s an increase of more than 20 percent, so if it continues like this, it would be extremely unwelcome.”