NL households have about €40 per month less to spend this year

Households in the Netherlands will feel that many things have become more expensive in their wallets this year. The National Institute for Budget Information (Nibud) calculated that families have to make do with an average of 40 euros less per month. It could be over 100 euros less per month for two-income households with multiple children. Households who did not get wage increases will face a decrease in purchasing power that can amount to over 200 euros per month.

"We see that large groups of households have dozens of euros less to spend every month," Nibud director Arjan Vliegenthart summarized the many purchasing power scenarios examined. This is the sharpest decline in purchasing power in years, according to Nibud.

The biggest culprit is high inflation, researchers at the institute found. It increased sharply due to high energy prices. Nibud was already pessimistic about purchasing power forecasts in September. At the time, it was not yet possible to predict that gas and electricity prices would increase as much as they did.

The government's cut to energy tax partly compensates for the higher energy bill. And households with a low income can also receive an extra allowance from the municipality for energy costs. However, according to the researchers, this is not enough to absorb the entire decline in purchasing power.

Nibud's calculations assumed inflation of 3 percent, as De Nederlandsche Bank (DNB) forecast for this year. The institute warned that if inflation rises even further, people will have even less left in their wallets.

Vliegenthart is especially concerned about "the over 2 million households that are already budgeting frantically to get all the bills paid." For example, people on social assistance benefits and people with high rents seem to be structurally in trouble. This decrease in purchasing power is likely also severe for older people with only a state pension and a small pension.

But many more Netherlands residents will have to be alert. "Many will get a paycheck this week where the net salary is higher than what they got last year, and yet the money flies out of the wallet faster," explained Vliegenthart. "The higher salary disappears after grocery shopping a few times due to the higher prices in the supermarket."

Nibud cannot yet say what the plans for the recent coalition agreement will mean for the wallet. It is still working on those calculations.