NOS News•today, 07:10
Life has become a bit more expensive again. In January inflation was 3.2 percent, according to the first quick calculation by Statistics Netherlands (CBS). A month earlier, inflation was still 1.2 percent.
The inflation figure indicates that the prices of products and services were more than 3 percent higher in January than a year ago.
The provisional figures do not show exactly what increased in price last month. Statistics Netherlands only reports that food, drinks and tobacco were more than 4 percent more expensive than a year earlier.
Prices for services rose by almost 5 percent. The falling rates for gas, electricity and district heating dampen the inflation rate somewhat.
Since July 2022, the European Central Bank (ECB) has been fighting inflation by gradually raising key interest rates. Ten interest rate steps further, the base interest rate is now 4 percent.
The ECB’s higher interest rate affects all kinds of market interest rates, such as lending interest, mortgage interest and savings interest. By making borrowing money more expensive, the central bank wants to discourage spending. This reduces the demand for services and products and lowers prices.
The ECB targets an average inflation rate of around 2 percent for the entire eurozone. This seems to be possible for most euro countries this year, although there are quite large differences between them.
Statistics Netherlands’ inflation figure is somewhat distorted by a different calculation method for energy prices that Statistics Netherlands has used since June last year. Statistics Netherlands used to calculate with the price of new energy contracts, instead of with the price of the actual current energy contracts.
The price of those current energy contracts was lower for many households for a long time than that of the new energy contracts. The old inflation figures were exaggeratedly high due to those energy prices.
The new inflation figure is therefore more correct, although it will take until June this year before the effect of the changed calculation method has disappeared from the figure.