‘The Netherlands is swimming against the current again’

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The Netherlands is swimming against the current in terms of inflation, and that is not good news according to macro economist Edin Mujagic. Inflation is rising in the Netherlands, while falling elsewhere. The reason? ‘It’s actually very difficult to indicate.’

The Netherlands is swimming against the current in terms of inflation, and that is not good news according to macro economist Edin Mujagic.  Inflation is rising in the Netherlands, while falling elsewhere.  The reason?  'It's actually very difficult to indicate.'
The Netherlands is swimming against the current in terms of inflation, and that is not good news according to macro economist Edin Mujagic. Inflation is rising in the Netherlands, while falling elsewhere. The reason? ‘It’s actually very difficult to indicate.’ ( ANP / Hollandse Hoogte / Jeffrey Groeneweg)

Mujagic emphasizes that this is the first estimate of Statistics Netherlands, and that it therefore concerns limited data. ‘However, if you look at the developments in the Netherlands, you see that wage increases have been considerable in recent months,’ explains Mujagic. “So that must have had an effect on those data.”

‘Wage increases in the Netherlands have been considerable in recent months’

Macroeconomist Edin Mujagic

In addition, according to Mujagic, it is evident that the fall in energy prices in other countries has a faster effect on the inflation rate than in the Netherlands, which in turn has to do with the price cap on energy introduced by the Netherlands. ‘That dampens the downward pressure on inflation.’

Wage increases

Take the wage increase that is visible in more and more sectors, and it is not surprising, according to Mujagic, that the prices of services and goods are rising considerably. “So if you take it together: the dampening effect is less with us, while the upward effect is very strong,” he says. ‘And so inflation rises, while it falls in other countries.’

According to Mujagic, the fact that prices for goods and services are rising in the Netherlands is mainly due to the fact that companies also have to deal with high costs, such as wage increases. ‘But companies also anticipate, of course,’ he says. ‘And I can well imagine that there are quite a few companies in the Netherlands that think that the cost increases they have experienced will continue. That is why they may have raised prices further.’

Deposit

Mujagic also understands this, especially since the trend seems to indicate that wage increases will remain high for the time being. ‘In anticipation of employees asking for higher wages, as a company you are of course already going to raise those prices,’ he concludes. “I don’t know if you should call it grab-flation, but it’s what any rationally thinking company would do.”


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