Netherlands residents spending more despite increasing prices

Inflation is not slowing down spending, according to research by ABN Amro at the request of BNR. Last month Netherlands residents spent 21 percent more on eating out, electronics, furniture, and food than before than pandemic.

The continuous high spending could be because people are in an adjustment period, says Gerarda Westerhuis, sector economist retail and leisure at ABN Amro. Some may be celebrating that the pandemic is over and others aren’t yet feeling the strain of high energy prices on their wallets.

Westerhuis believes that spending habits will change in the coming months. “Low-income households feel inflation the most because a large part of their income is spent on both energy and food.” Those in the middle-income bracket are also increasingly afraid that they will no longer be able to pay their bills. “Throughout the course of the year, more and more will feel the knock of inflation and therefore spend less,” Westerhuis says.

According to BNR economist Han de Jong, it is hard to say when different groups will start feeling the strain of inflation. However, consumer confidence fell to its lowest level ever in April. “Currently, the relationship between consumer spending and confidence indicators is completely disrupted.”

Entrepreneurs struggling with post- pandemic debt may be hit especially hard. Many were just finding their feet again after Covid-19 and are now seeing their income plummet. Nevertheless, there is a positive spin, according to De Jong. “Part of inflation is because there is more demand than supply. Less demand balances everything out, which may also lower inflation.”