Dutch purchasing power will take a blow from Russian invasion: CPB director

The war in Ukraine will have consequences for the purchasing power of many Netherlands residents, director of Central Planning Bureau (CPB), Pieter Haskekamp, warned on NPO Radio 1 program Geld of je Leven. Hasekamp said that people with a low income could be particularly affected and that the Cabinet must, therefore, "do something extra."

According to the CPB director, low-income households are less able to absorb the consequences of, for example, a higher energy bill. As far as he is concerned, the government should, therefore, reach into its own wallet for this group. "I think there is reason to do some extras," he said in the radio program.

Hasekamp fears that not only energy prices but also those of food products will rise as a result of the Russian attack on Ukraine. "In the long run, inflation can broaden to, for example, a wage-price spiral," he explained. "Then you end up in a scenario, such as in the 1970s, in which major interventions are required to bring inflation down. That has major economic consequences."

The average Dutch household's energy bill was already expected to increase by some 86 percent this year due to higher prices for gas and oil. After the Russian invasion of Ukraine last week, the gas price jumped 30 percent. Russia and Ukraine aren't only significant exporters of fossil fuels but also of edible oils like palm oil and grains.