Consumer confidence nears record low due to Ukraine war

The mood among consumers in the Netherlands has deteriorated considerably since the Russian invasion of Ukraine. According to Statistics Netherlands (CBS), the consumer confidence indicator fell to almost its lowest level ever. The only time consumer confidence was lower was in February and March 2013.

Consumers in the Netherlands have been feeling gloomier and gloomier for months. Prices rose sharply, and life became more expensive. According to CBS, the war in Ukraine affected consumer confidence for the first time in March as it pushed inflation in Europe even higher.

The CBS consumer confidence indicator stood at -39 in March, compared to -30 in February. With that, consumers' outlook is even gloomier than during the low point of the coronavirus crisis in May 2020, when the indicator stood at -31. After the first coronavirus year, consumer confidence slowly improved to -3 in June last year and then dropped again as the pandemic resurged.

Consumers have also become more negative about the economic outlook for the next twelve months. They also became more pessimistic about their own financial situation in the foreseeable future. Inflation likely plays a significant role here. Consumers regarded March as an even less favorable month to make large purchases than February. The CBS indicator for the willingness to buy fell to the lowest level in 8.5 years.

The trend in consumer confidence does not match Netherlands residents' actual consumption. According to the latest measurements, spending was over 11 percent higher in January than a year earlier, while consumer confidence had already deteriorated significantly in January.

The government's coronavirus policy mainly sparked the increased consumption. At the start of this year, most non-essential stores were still closed. They were allowed to open with limited hours from mid-January. This meant that the coronavirus restrictions were less strict than a year earlier when shops were closed for the entire month.

Netherlands residents were more economical with gas, electricity, and motor fuels in January. These were already much more expensive than in the months before. Corrected for price changes, people used less energy and spent less on petrol and diesel.