Despite constant cost-cutting, budgeting and discount shopping, the average Dutch citizen finds their wallet getting a little bit slimmer with each month. While it may be tempting to blame it on the new pair of shoes or that one night a month that you allow yourself to dine out, the actual fault lies with a little bit of everything in your daily shopping basket.
Even though 2023 saw the highest wage growth since 1991, at 5.74%, and the energy prices continued to fall, albeit not as quickly, food and consumer goods prices continue to increase. The ideal inflation rate for any country is 2%. 2022 saw the highest inflation rate, 14.5% in September, mostly due to the drastic increase in energy prices but also on account of interrupted supply chains and geopolitical instability. Since then, prices have come down a lot, but they are still nowhere near the ideal rate. Just last month inflation rose to 6.1%, up from 5.2% in April.
The bad news is that this inflation is largely reflected in the everyday goods prices – fresh vegetables, fruits and drinks. Apparently, the high prices are still driven by energy prices that are not falling fast enough. Just last month, products in supermarkets saw a price increase of 12.8% on average. The service industry also saw a price increase of 6.1%. Clothing is another contributor to inflation with a price increase of 11.8%. Though between clothing and food, the former is the smaller contributor of the two to the overall inflation figures.
Even though employees have been able to negotiate better wages with their employers, it is still not enough to meet the inflation rate. So, with each passing month, Dutch people have a little less money to spend. In fact, inflation is being felt around the world, including all the countries in the Eurozone. However, there seem to be some countries better off than the others. According to the latest data released by Eurostat, Belgium, Spain and Luxembourg are all enjoying a much lower inflation rate at 2.7%, 2.9%, and 2.0% respectively. As inflation keeps increasing, the European Central Bank will also continue to hike interest in an effort to rein in the increased prices.
Dutch people, always known for their resourcefulness, have resorted to a number of ways to save money without making any significant sacrifices to their lifestyle. 58% of participants in an independent study conducted by Future of Food acknowledged having adjusted their grocery shopping behaviour due to the increase in prices, including paying more attention to discounts, especially on A-brands. Several participants stated they had increased their self-sufficiency by baking their own bread and growing their own vegetables. Luxury items such as candy and chips are either not bought at all or bought in small quantities. People who made no changes to their shopping style admitted to already being price-conscious buyers.
The expectation is for the inflation to come down somewhat in the next quarter and significantly by the end of the year – but whether those expectations will be realized remains to be seen.
Written by Priyanka Sharma