After a period of decline and despite measures taken by the European Central Bank (ECB), inflation in France and Spain has risen again. The inflation figures for the Netherlands and the eurozone will be announced later this week. There is a chance that these figures will also show an increase, says BNR’s house economist Han de Jong. The high food prices in particular throw a spanner in the works.
Inflation in France and Spain rose by 7.2 and 6.1 percent respectively, after falling further in January. Core inflation, excluding energy and food prices, has now also risen further, says De Jong. “What you see in all the numbers is that inflation for food continues to rise.”
Yesterday it was announced that although inflation has fallen in Belgium, food prices have risen by more than 17 percent. In France, the increase was 14 percent. ‘Those percentages are extremely high.’
Bad weather around the Mediterranean, where a lot of vegetables are grown, and the high gas price may have something to do with this. ‘This has also made heating the greenhouses in the Netherlands more expensive,’ says De Jong.
On Thursday, Statistics Netherlands (CBS) will announce the Dutch inflation figure. On that day, the European statistics office Eurostat will also publish the figure for the eurozone. According to De Jong, it may just be that the Netherlands will follow the example of France, Spain and Belgium.
‘But perhaps more importantly, the financial markets will see this as a huge setback. They will anticipate more interest rate increases by the European Central Bank, which will raise interest rates again.’
European Central Bank President Christine Lagarde will announce a new interest rate decision on March 16. According to De Jong, ‘significant interest rate movements are underway’. For example, the Dutch ten-year interest rate is above three percent for the first time since 2011, for a two-year government bond the rate is 3.2 percent, ‘the highest level since 2008.’