Big drop in annual inflation; Down to 4.4% in March

The rate at which prices are rising in the Netherlands fell sharply in March compared to a month earlier. That was mainly due to falling energy prices. The prices of foodstuffs, beverages, and tobacco rose sharply again. Prices of industrial goods also increased further.

Statistics Netherlands (CBS) reported in a first estimate that inflation amounted to 4.4 percent this month. In February, inflation climbed to 8 percent on an annual basis from 7.6 percent in January. In December, consumer goods and services were still 9.6 percent more expensive than twelve months previously. At its peak in September last year, inflation was 14.5 percent.

The average price increase of products in supermarkets was 15.0 percent in March, compared to 15.1 percent in February. Prices of industrial goods rose by 8.8 percent, compared to 8.7 percent in February. On the other hand, energy, including motor fuels, became over 28 percent cheaper after a price drop of 1.1 percent in February.

To make a good comparison with other European countries, CBS also calculated inflation based on the European method, which does not include housing costs like rent, among other things. According to this method, inflation was 4.5 percent, compared to 8.9 percent in February.

The Netherlands is not the only country where inflation has decreased. Earlier this week, Germany and Spain also reported that living expenses rose less sharply in March. Later on Friday, the European statistics agency Eurostat will release inflation figures for the entire eurozone.

As inflation is still above the target of 2 percent, the European Central Bank (ECB) will likely continue to raise interest rates. However, the extent of the next rate hike is still unclear. Following the interest rate hike of half a percentage point earlier this month, the ECB may opt for a more minor increase of a quarter of a percentage point.