European inflation stable at 2.4 percent, slightly down in the Netherlands

On average, prices for Dutch consumers were 2.7 percent higher in April than in the same month a year earlier. Since January, the inflation rate has fluctuated around 3 percent. In the autumn of 2022, this was still above 14 percent, mainly due to the high prices of gas and electricity.

Energy prices rose 3.3 percent in April compared to a year earlier, compared to 3.7 percent last month. Petrol and diesel have risen further in recent weeks, the petrol price is again well above 2 euros.

This follows a long decline in gas, electricity and fuel prices after all records were broken in 2022. Due to highly fluctuating energy prices, inflation even fell below 0 percent in October for the first time in years.

These inflation figures are an initial estimate for April from the Central Bureau of Statistics (CBS). The statistics office will publish the final figures on May 7.

Eurozone

Inflation in all euro countries combined was the same in April as in March: 2.4 percent. This is evident from preliminary figures from statistical agency Eurostat. This is mainly because food prices have risen less rapidly than last month. Energy prices are still falling in Euro countries, but less rapidly than last month. Core inflation, which does not include the highly fluctuating prices of energy, food, drinks and tobacco, has fallen further. In April, core inflation was 2.7 percent, in March 2.9 percent.

This decline makes an interest rate cut in June more likely. In recent years, the European Central Bank ECB has attempted to reduce inflation to 2 percent by raising interest rates. Now that goal is increasingly coming into view. Lowering the interest rate that ECB charges banks will also have consequences for consumers, for example, mortgage interest rates may be lower. DNB President Klaas Knot warned yesterday in an interview with the Japanese business newspaper Nikkei that the next interest rate cut could take some time after June. “The pace of wage increases still needs to slow down quite a bit,” Knot said.

Energy and groceries

Food prices continue to rise in the Netherlands, but at a slower pace than before. Food, drinks and tobacco are on average 3.2 percent more expensive than a year ago, which was 2.8 percent in March. A year ago, food price inflation was still around 18 percent on an annual basis. The largest price increase for consumers is now not in groceries but in services, of which prices rose 4 percent compared to a year earlier.

Since June 2023, energy price inflation has been calculated based on new and existing energy contracts. Until May, only newly concluded energy contracts were included in the inflation figure. As a result, inflation was higher in the first months after the start of the war in Ukraine, when new energy contracts rose rapidly in price.

Since November 2022, the new method would actually have led to higher inflation: existing contracts were generally more expensive from that moment on. CBS will not change the old figures retroactively. The price index according to the new method is compared with the ‘old’ price level in July 2022.

International

Inflation is also calculated in a European context, where Dutch inflation also amounts to 2.6 percent in April. In February this was 3.1 percent. The so-called harmonized price index of the European Union is lower for the Netherlands than the consumer price index. The biggest difference: the costs of living in your own home are not included in the European figures.

Prices are also rising in other countries, but many EU countries are seeing much lower inflation rates than before.

Below you can see the latest known inflation figures for EU countries. Inflation in Belgium is much higher than in the Netherlands, at 4.9 percent. Lithuania and Finland recorded the lowest inflation in April.

Wages and fuel

Fuel prices are being watched with suspicion by many. Due to the expensive refueling, the government temporarily reduced the excise duty on petrol and diesel at the beginning of April 2022. This excise duty reduction was partially reversed at the beginning of July, which is clearly reflected in the prices at the pump. Prices have steadily fallen in recent months, but a small increase has been visible since the turn of the year. Since March, the petrol price has been above 2 euros again, and in April the petrol price rose further.

Wages are also rising, but for a long time they could not keep up with the monetary depreciation. This means that many Dutch employees now have less to spend than two years ago. In October, collective labor agreement wages were on average 6.5 percent higher than a year earlier. Over the entire year of 2023, the average wage increase will be 6.1 percent.