Rising inflation, yet recession fears

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Dutch inflation has risen, also in comparison with other European countries. The increase is not so much related to food and energy, but mainly to the sizeable Dutch services sector. This, in combination with the declining producer confidence and the interest rate hikes ahead, makes BNR’s resident economist Han de Jong fear a recession.

Shops in Schiedam. Dutch inflation has risen, also in comparison with other European countries. (ANP / Hans van Rhoon)

Inflation is disappointing, De Jong calls it a considerable increase. ‘Compared to last year when inflation was 14.5 percent, it’s not that bad, of course, but we had already fallen sharply to 4.4 percent in March.’ De Jong also calls the increase significant compared to other countries. For example, inflation fell in Germany and Belgium, while it rose somewhat in France and Spain. So we’re in the wrong group. And with us that increase is more than in France.’

‘The inflation rate is disappointing’

Han de Jong, BNR economist

It is true that we see food inflation decreasing somewhat and that energy inflation has also decreased, but what De Jong notices is that inflation in the (large) services sector has increased. ‘The overall picture is not positive.’

ECB interest rate increase

In addition, the European Central Bank is likely to raise interest rates on Thursday, as inflation in the eurozone as a whole is well above the ECB’s target. According to De Jong, the ECB has ‘started very late’ with rate hikes, and is lagging behind the Americans. While the ECB may adjust the pace, the bank will continue to hike interest rates.

‘The overall picture is not positive’

Han de Jong, BNR economist

De Jong is also not pleased with the drop in producer confidence reported by CBS. He points out that two measures are used to measure business confidence in the industry. According to Statistics Netherlands, it is still above the long-term average, so from that point of view, the drop in confidence is not too bad.


An alternative benchmark is that of the Dutch Association of Purchasing Managers, the Nevi. And that measure points to a contraction, despite inflationary pressures on the industrial sector easing. ‘If you look at the details, yes, it just doesn’t look very nice,’ says De Jong. The economist expects inflation to increase in the coming two months, but in combination with the Nevi figures, he still fears a recession. ‘I’m afraid he will come later this year anyway.’

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