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By Charlotte Boström,Economics editor
As the world steps into 2025,economic landscapes are undergoing critically importent transformations. From shifting trade dynamics to evolving labor markets, the global economy is at a crossroads. Charlotte Boström, Economics Editor at NOS News, delves into the key trends shaping the year ahead, offering insights into what businesses, policymakers, and individuals can expect.
The Rise of Digital Economies
Table of Contents
One of the most notable trends in 2025 is the accelerated growth of digital economies. with advancements in artificial intelligence and blockchain technology, industries are increasingly moving online. “The digital transformation is no longer a choice but a necessity,” says Boström. Companies that fail to adapt risk being left behind in an increasingly competitive market.
For instance, the rise of decentralized finance (DeFi) is reshaping traditional banking systems. Platforms like Ethereum and Solana are enabling peer-to-peer transactions without intermediaries, offering greater financial inclusion. However, this shift also raises concerns about regulatory oversight and cybersecurity.
Labor Market Evolution
The labor market is also experiencing profound changes. Automation and AI are replacing routine jobs, while demand for skilled workers in tech and green energy sectors is surging. “The skills gap is widening,” notes Boström. “Workers need to upskill to remain relevant in this new economy.”
Governments and corporations are investing heavily in reskilling programs. For example, the European Union has launched initiatives like the Digital Europe Program, aimed at equipping citizens with digital competencies. Similarly, companies like Google and Microsoft are offering free online courses to help workers transition into tech roles.
Sustainability Takes Center Stage
Sustainability is no longer a buzzword but a core business strategy. In 2025, companies are prioritizing environmental, social, and governance (ESG) criteria to attract investors and consumers. “Consumers are increasingly voting with their wallets,” says Boström.”They want to support brands that align with their values.”
The push for sustainability is also driving innovation in renewable energy. Solar and wind power are becoming more affordable, with countries like Germany and China leading the charge. Meanwhile, electric vehicle adoption is skyrocketing, with tesla and BYD dominating the market.
Geopolitical Tensions and Trade Wars
Geopolitical tensions continue to cast a shadow over global trade. The ongoing rivalry between the U.S. and China is disrupting supply chains and inflating costs. “Trade wars are creating uncertainty for businesses,” warns Boström. “Companies are diversifying their supply chains to mitigate risks.”
For example, many manufacturers are relocating production to Southeast Asia and India to reduce dependence on China. this shift is reshaping regional economies and creating new opportunities for emerging markets.
Key Takeaways for 2025
| Trend | Impact |
|————————–|—————————————————————————|
| Digital Economies | increased adoption of AI and blockchain; rise of DeFi |
| Labor Market Evolution | Automation displaces routine jobs; demand for tech skills grows |
| Sustainability | ESG criteria drive business strategies; renewable energy adoption surges |
| Geopolitical Tensions | Trade wars disrupt supply chains; companies diversify production |
What’s Next?
As we navigate these changes, collaboration between governments, businesses, and individuals will be crucial. “The challenges are immense, but so are the opportunities,” concludes Boström. By staying informed and adaptable, we can harness the potential of this new economic era.For more insights on global economic trends, visit NOS News.
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This article is based on exclusive reporting by Charlotte Boström,Economics Editor at NOS News.
Why Do we Still Feel the Pinch of Inflation Even When Prices Aren’t Rising as Much?
For years, the rising cost of groceries has been a constant topic of conversation. According to an Ipsos poll, 85% of participants believe food prices will continue to climb in the first half of this year. But here’s the twist: the numbers tell a different story. In 2023, inflation on consumer goods and services, such as clothing or haircuts, was 3.3%, while food prices rose by just 1.1% compared to the previous year. So, why do many of us still feel the sting of inflation? Three economists weigh in on this puzzling phenomenon.
Our Brains Are Just Slow
One key factor is how our brains process information. Humans have a tendency to assume that recent events will repeat themselves in the near future. This psychological phenomenon, known as extrapolation, explains why we still feel the impact of high inflation even when the numbers suggest or else.Kim Peijnenburg, a professor of household economics at Tilburg university, explains, “People often do this with figures, research shows. There is no clear answer to why our brains are so slow. It is a typical example of wrong expectations that we as humans create about our habitat.”
Simply put, as inflation was high recently, we unconsciously expect it to remain high, even when the data shows a slowdown.
What Is Inflation Anyway?
Another reason for this disconnect is that inflation is a complex and abstract concept. Researchers at the University of Groningen found that nearly a quarter of respondents didn’t fully understand how inflation works.
Peter Hein van Mulligen, chief economist at CBS, notes that people tend to focus on the absolute price of goods rather than the rate of increase.“The fact that you are still shocked by high prices in the supermarket is not because they have risen a lot in the last month. It is because people still regard the prices of a few years ago as normal,” he says.
this fixation on past prices creates a skewed perception of current costs. While economists focus on inflation rates,consumers are more concerned with the price level itself.
If You Drink, Smoke, and Rent, It’s a Different Story
The impact of inflation also varies depending on individual spending habits. As a notable example, those who spend more on items like alcohol, tobacco, or rent may feel the effects of inflation more acutely. These categories often experience higher price increases compared to groceries, which have seen relatively modest rises.
Key Takeaways
| Factor | Description |
|———————————|———————————————————————————|
| Extrapolation | Our brains assume recent high inflation will continue, even when it slows down.|
| Misunderstanding Inflation | many people struggle to grasp how inflation works, focusing on absolute prices. |
| Spending Habits | Certain categories, like rent or tobacco, may see higher price increases. |
Why Does This Matter?
Understanding the gap between perception and reality is crucial for both consumers and policymakers. while inflation rates may be stabilizing, the lingering effects of past price hikes continue to shape public sentiment. As Van Mulligen points out, “What matters most to consumers is the price level.”
So, the next time you feel the pinch at the checkout counter, remember: it’s not just about the numbers—it’s about how our brains interpret them.
What’s your experience with inflation? Share your thoughts in the comments below or take our fast poll to see how others are coping with rising prices.
For more insights on inflation and it’s impact, check out this detailed analysis from the CBS.
Inflation is often discussed as a single, uniform figure, but the reality is far more nuanced. While the CBS inflation figure provides an average, it doesn’t account for the diverse spending patterns and financial burdens of individuals. For some, inflation feels like a minor inconvenience. For others, it’s a significant financial strain.
Why inflation Hits Differently
Take rent increases, such as. According to Marike Knoef, a professor of economics at the universities of Groningen and Tilburg, “Rent is a major expense. So when people say that inflation is very high, that may certainly be the case in their situation. Anyone who owns a home and has a fixed interest rate is of course not affected by this.”
Similarly, excise duties on alcohol and tobacco surged last year, adding to the financial pressure for those who consume these products. These examples highlight how inflation impacts vary depending on individual circumstances.
The Misconception of Inflation
Research shows that people often misjudge how high inflation actually is. Many base their perception on recent price hikes,which can skew their understanding.As noted by the European Central Bank, this misperception is a significant issue. Professor Peijnenburg explains, “People’s inflation expectations make a huge difference. When people overestimate inflation, they spend more money because they think their money will be worth less tomorrow. That only leads to even more inflation.”
This cycle underscores the importance of accurate information.”The increases are often less intense than what they think,” Peijnenburg adds.
Bridging the Information Gap
So, how can we ensure people have a realistic understanding of inflation? Economists argue that journalists, researchers, and government institutions play a crucial role. They must communicate clearly and specifically about what’s becoming more expensive or cheaper, as there’s no such thing as an “average consumer.”
Additionally, it’s essential to specify the time period covered by inflation figures. Openness helps people contextualize the data and avoid overreacting to short-term trends.
Key Takeaways
To summarize the key points:
| Aspect | Details |
|————————–|—————————————————————————–|
| CBS Inflation Figure | An average that doesn’t reflect individual spending patterns. |
| Rent Increases | A major expense impacting renters more than homeowners. |
| Excise Duties | Higher taxes on alcohol and tobacco add to inflation for specific groups. |
| Misperception | People often overestimate inflation based on recent price hikes. |
| role of Institutions | Clear dialog from journalists and researchers is crucial. |
Understanding inflation requires more than just looking at averages. It’s about recognizing how different factors—like rent, taxes, and spending habits—affect individuals uniquely. By fostering accurate perceptions, we can help people make better financial decisions and mitigate the broader economic impacts of inflation.
For more insights on inflation trends, explore the European Central Bank’s analysis on how public perceptions shape economic behavior.
Rue for them, even if the overall inflation rate is lower.”
This discrepancy arises because inflation is calculated as an average across a broad basket of goods and services.However, not everyone spends their money likewise. As a notable example, someone who rents an apartment in a high-demand urban area might experience much higher inflation in their housing costs compared to someone who owns their home outright. Similarly, individuals who spend a larger portion of their income on categories like healthcare, education, or transportation may feel the effects of inflation more acutely than those who don’t.
The Role of Income Levels
Income levels also play a notable role in how inflation is perceived. Lower-income households, which spend a larger proportion of their earnings on essentials like food, housing, and utilities, are often hit harder by inflation.In contrast, higher-income households may have more versatility to absorb price increases without significant lifestyle changes.
Regional Variations
Inflation can also vary significantly by region. Urban areas, where demand for housing and services is higher, often experience faster price increases than rural areas. Additionally, local economic conditions, such as job market strength or the availability of goods and services, can influence how inflation impacts different communities.
Policy Implications
Understanding these hidden realities of inflation is crucial for policymakers. A one-size-fits-all approach to managing inflation may not address the specific challenges faced by different groups. Targeted measures, such as subsidies for essential goods or rent controls in high-cost areas, could help mitigate the disproportionate impact of inflation on vulnerable populations.
Key Takeaways
| Factor | Description |
|———————————|———————————————————————————|
| Spending Patterns | Different spending habits mean inflation impacts individuals differently. |
| Income Levels | Lower-income households are frequently enough more affected by inflation. |
| Regional Variations | Urban areas may experience higher inflation due to greater demand. |
| Policy implications | Targeted measures are needed to address the uneven impact of inflation. |
conclusion
inflation is not a monolithic force; it affects people in different ways depending on their circumstances. By recognizing these variations, we can better understand the true impact of inflation and develop more effective strategies to address its challenges.
What’s your experience with inflation? Share your thoughts in the comments below or take our fast poll to see how others are coping with rising prices.
For more insights on inflation and its impact,check out this detailed analysis from the CBS.
