Friday, March 17, 2023

How Bad Does It Have To Get?

 Food inflation has accelerated in the Netherlands with prices surging 18.4% year-on-year in February from a 17.6% January reading, data shared on Tuesday by Statistics Netherlands (CBS) shows.

Clothing was also considerably more expensive, surging 11.8% last month from 9.4% in January. Experts point out that these two items in particular contributed to inflation last month, which amounted to 8%.

An economist at the third-largest Dutch bank ABN Amro, Aggie van Huisseling, said that unusually high energy prices continued to fuel inflation in the country. The increase in food prices stems mainly from the soaring costs of fresh vegetables, as products like tomatoes currently come mainly from greenhouses that are heated with gas, Van Huisseling explained.

At the same time, fuel prices eased somewhat, declining 9.4% in February compared to the same period last year, figures from the CBS showed.

According to the European harmonized consumer price index (HICP), consumer goods and services in the Netherlands were 8.9% more expensive in February than the previous year and up from 8.4% in January.

Economists from ABN Amro expect inflation to cool this year and decline to 4%, but warn that a rise in energy prices will be passed on to the cost of other products.

Annual inflation in Poland accelerated in February to the highest level since 1996, data released by the national statistics service GUS showed on Wednesday.

Consumer prices rose 18.4% year-on-year in February, up from the 16.6% recorded in the previous month.

Economists are predicting that the latest surge will mark the peak of the current cycle, but Polish consumers say they are struggling to pay household bills and buy basic groceries, with price growth at its steepest in more than a quarter of a century.

The figures show that the February reading surpassed the previous high of 17.9% recorded in October 2022, with food prices, transport and energy costs rising fastest last month.

Prices of food and non-alcoholic beverages saw the most significant annual increase in February of up to 27%, compared to 26.6% in January. Housing-related rates jumped 22.7% while the cost of heating fuel, water and central heating increased, the report said.

The Polish economy slowed in 2022 amid soaring inflation and a plunge in consumer spending brought on by the conflict in neighbouring Ukraine and the impact of sanctions on Russia.

Food prices in Finland saw a historic jump of 16.3% last month in annual terms, according to official data released on Tuesday. The figure represents the highest price growth since 1964, the country’s statistics agency reported.

Data showed that the high cost of electricity, food, and increased loan interest rates were the main drivers of inflation on an annual basis.

According to the report, the core inflation rate, which excludes food and energy prices, continued to rise sharply and reached 6.6% in February.

Jukka Appelqvist, chief economist of Finland’s Central Chamber of Commerce, said that while prices may not continue to rise as rapidly as in February, the persistence of inflationary pressures is a major economic risk. The official noted that there were no signs of an uncontrollable spiral of prices and wages falling in the country. However, he warned that a stable and low inflation rate is unlikely to happen in the near future.

The prolonged tight monetary policy and rising interest rates could lead to a deeper recession than anticipated, Appelqvist suggested.

The EU nation sank into recession in the fourth quarter last year after GDP had shrunk more than expected from the previous three-month period. The decline was led by exports, investments and consumption, official data shows.

Economists have projected a mild recession for the Finnish economy this year before a rebound in 2024.

RT 17/3/23

Dave C.

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