Inflation rose to 5.2% in April. Last month, inflation was still at 4.4%. Worrying, says De Nederlandsche Bank. “Food became 0.2% cheaper in April than it was a month earlier. This is good news,” says BNR in-house economist Han de Jong. Despite this, he calls the picture “quite complicated.”
The bearish inflation line is bouncing up again, according to De Jong, this has everything to do with the erratic price performance a year ago. “CBS also rightly points out that this rise in inflation is partly due to energy.” Energy prices developed very erratically last year and, according to the economist, this type of effect makes the picture “quite complicated”.
Manna
Inflation minus energy and fuels has decreased. That figure was 7.8% in April and was still 8.1% a month earlier, “so the rise in inflation is largely due to energy prices and not so much because those prices are rising so fast now, but because they were down slightly last year due to the erratic course in April.” In short, the effects for consumers are not too bad yet.
“CBS also rightly points out that this rise in inflation is partly due to energy”
Food inflation has continued to rise in recent months. In March, food prices were still 18.4% higher than a year earlier, but fell 15.9% in April. “Food became 0.2% cheaper in April than it was a month earlier. This is good news, in the period from October last year to February this year, food prices have increased by about 10 percent.’ Which means that the decline in energy prices is starting to translate into other components.
Worrying
It doesn’t matter that De Nederlandsche Bank calls the picture “worrying”. According to De Jong, this is due to DNB’s 2% inflation target, anything above is obviously too high. De Jong thinks that not only will inflation rise a bit, but current wage increases are incompatible with a 2% inflation rate. And that means the ECB will raise interest rates one or two more times. “That possibility seems very high to me.”
What will inflation do for the rest of the year? De Jong stresses the importance of base effects and believes inflation will pick up further in May and June, although this has everything to do with last year’s erratic pattern. This is followed by a period in which the inflation rate can drop significantly, because prices soared in the same period last year due to rising gas prices.
The numbers
Headline inflation therefore increased again in April. This is mainly due to the fact that energy prices fell less sharply last month than in March. Energy, such as gas, electricity and district heating, cost 32.2% less in April. Prices were still 36.5% lower in March. Gasoline was 11.1% cheaper last month and was 20.8% cheaper in March. According to Statistics Netherlands, the effect of the reduction in fuel excise taxes in April last year will no longer affect inflation from April this year.
The prices of food, beverages and tobacco increased again, albeit less markedly than in March. Food prices were 15.9 percent more expensive in April than a year earlier. In March it was 18.4%. The trend in the prices of meat, vegetables and dairy products in particular contributed to this.
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.
