ING expects inflation in the Netherlands to rise further in the coming months. This follows what the bank describes as a relatively mild increase in March. According to ING economist Marcel Klok, the limited rise likely hides “what is yet to come”, as higher energy prices have not been fully passed on to consumers.
Inflation rose to 2.7 per cent in March, up from 2.4 per cent in February, driven mainly by higher energy and fuel prices. These prices increased by 6.5 per cent last month. Klok said this is only the start of a higher cost of living for many households, as wholesale energy prices have risen much more sharply since the war in Iran began.
Many Dutch consumers are still shielded from higher prices. According to figures from regulator ACM, around 53 to 56 per cent of households have a fixed‑price energy contract. While dynamic contracts have become more popular in recent years, only 6 to 8 per cent of consumers face prices that change during the day. The remaining households have variable contracts, with rates adjusted every six months.
Drinks, alcohol and tobacco more expensive
In addition to energy and fuel, prices for food, beverages, alcohol and tobacco also increased in March. Klok said this ended the downward trend seen in recent months. Food production often uses a lot of energy. However, he does not believe the March increase is already linked to higher energy costs. Such effects usually become visible only after several months.
Klok noted that core inflation, which excludes volatile prices for energy, food, alcohol and tobacco, offered more positive news. Core inflation fell in March.
Energy prices
Because core inflation is still easing, ING expects energy prices to become the main driver of inflation in the period ahead. As more households feel the impact of higher energy costs, overall inflation is likely to rise further.
Uncertainty remains high, however, due to the unclear duration and outcome of the war. In its base scenario, ING expects inflation to reach 3 per cent in 2026. This assumes the price of Brent crude falls to 70 dollars per barrel and the gas price to 28 euros per megawatt-hour. At present, prices remain much higher, at 112 dollars and 53 euros respectively.
@anp | NEWS BRAINPORT
