The latest report from the Netherlands Bureau for Economic Policy Analysis (CPB) has revealed that the war in Ukraine and rising energy prices will see the cost of living in the Netherlands rise by 5,2 percent in 2022.
Published on Wednesday morning, the CPB’s Central Economic Plan 2022 outlines the agency’s key economic outlooks for the year. As the situation in Ukraine continues to escalate, the CPB notes it’s difficult to put together precise predictions for the coming months as the future remains uncertain, however, the experts are sure the ongoing war will have significant consequences for the lives and finances of those living and working in the Netherlands.
When it comes to the annual Dutch inflation rate, CPB expects the prices of goods and services will rise by 5,2 percent this year. A more optimistic outlook - which would require the price of energy to return to the 2019 level - predicts an inflation rate of 3 percent, whereas the worst-case scenario could see inflation reach 6 percent in 2022.
The CPB report comes as the Netherlands faces significant changes to the prices of a number of goods as a result of the ongoing conflict in Ukraine, with petrol prices rising at an increasingly rapid rate.
With prices rising across all sectors of the economy, the CPB estimates that purchasing power will fall by as much as 3,4 percent. The biggest blow will be for families with a lower income and single-person households as they face rising energy bills with only limited financial support from the Dutch government.
The CPB report comes after Prime Minister Mark Rutte told the House of Representatives (Tweede Kamer) that there was little to be done to tackle the rising prices. “We all have to deal with a loss of prosperity,” the Prime Minister said on Tuesday. “At the most, the cabinet can dampen these new price increases.”
Rutte’s cabinet is facing increasing pressure from MPs to limit the effects of rising prices, but according to the Prime Minister there are no quick or easy solutions to the problems caused by the war in Ukraine. Finance Minister Sigrid Kaag has said she is “working very hard” to “make it as bearable as possible for people."