Holidays, insurance, groceries, the hospitality industry. You can’t think of it so crazy or it will be more expensive. Remarkably enough, the driver of the current wave of inflation – energy – is the only thing that is currently getting cheaper. How is that possible?
On Thursday it appeared that products and services were on average 8 percent more expensive last month than one year previously. Outliers were groceries, which cost no less than 15 percent more than in February 2022. But the prices of services, such as travel, transport or a visit to a restaurant, and of industrial goods have also risen.
Energy, of all things, was the only thing that became cheaper. Although only 1 percent, the energy bill drove many to despair last year. And while the pain of expensive gas and power is far from over, there are several suppliers who are lowering their rates right now. This is mainly because gas trading prices are significantly lower than a few months ago.
Because you need energy for many products and services, you would expect prices to fall as well. However, that is not happening for now. According to CBS chief economist Peter Hein van Mulligen, this is because companies can only pass on their higher energy costs in their sales prices after a while.
Higher prices only with new contracts
For example, supermarkets and food manufacturers conclude contracts for one year, for example. If the manufacturers incur more costs in the meantime, they can only charge this to the supermarket when a new contract is entered into. And that can take several months. The same situation can be seen in other sectors.
“On average, it takes about six months for a high energy price to really trickle down into other prices,” explains Van Mulligen. “The peak of the gas price was last summer. Add six months to that, and you’re somewhere in the spring. By then inflation should decrease again. Although you shouldn’t think that inflation will then immediately fall below 5 percent,” he tempers expectations.
According to Rabobank economist Michiel van der Veen, other factors also play a role. According to him, manufacturing companies also have to deal with more expensive raw materials and higher interest rates on loans they take out. Naturally, they also want to recoup those costs, so they increase their prices even further.
Higher wages also make life more expensive
Then there are the wages. They are rising sharply in many sectors. Employers’ association AWVN calculated that in the collective labor agreements concluded last month, wages will rise by an average of 7 percent. Significant wage increases have been agreed for months.
“As a result, people spend more money, which also leads to higher prices,” says Van der Veen. “In addition, employers also want to recoup the higher wages. As a result, prices are rising even further.”
