Inflation is declining sharply throughout the euro area, except the Netherlands. It is precisely the prices of things that are usually not volatile that have gotten higher with us. According to Bert Colijn, an economist at ING, this is a sign that inflation could last a while longer here.
While inflation fell in all other euro countries, or remained the same in the case of Malta, prices in the Netherlands increased by an average of 6.8% in May. Compared to 5.8 percent in April. What strikes Colijn is that, in addition to the price of food, the increase is mainly reflected in the prices of goods and services. And these are just the things that are usually least affected by price fluctuations.
“One possible conclusion that can be drawn is that inflation will therefore remain high here for a while”
‘It is therefore mainly due to slightly less volatile prices’, says the economist, ‘and this can be a further cause for concern. Because a little more importance is attached to the growth of prices in that category. One possible conclusion that can be drawn is that inflation here will remain high for a while longer.’
Overtaking movement
On his own, Colijn is surprised that these goods are rising in price. ‘One might think that the problems with parts supply have largely been resolved. There are no longer so many shortcomings. And companies that produce goods have to contend with lower energy costs.’
Inflation will eventually come down here too, predicts the ING economist. The question is how quickly this will happen and whether we can catch up in the long run.
Higher wages
Another factor, according to Colijn, is that wages are growing a little faster in the Netherlands than elsewhere. ‘The increase here is around 6 per cent, while the average for the euro area is just over 4 per cent. This provides more opportunities to consume at high prices. And it gives companies the opportunity to raise prices for longer.’
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.
