15 September 2023, by Emily Proctor
New data revealed by Statistics Netherlands (CBS) show that the Netherlands saw the biggest decline in purchasing power in 40 years during 2022. According to the organisation, the Dutch population’s purchasing power fell by an average of 1,2 percent.
Only severe crises have seen purchasing power fall by more than 1 percent
There have only been a few other instances where the Netherlands’ purchasing power has fallen below 1 percent, most recently during the Eurozone crisis of 2009 to 2013 and during the country’s own severe recession during the 1980s. In recent years, Dutch purchasing power has increased, even during the height of the COVID-19 pandemic in 2020 / 2021.
The government has already started to take steps aimed at improving the country’s purchasing power ahead of budget day (Prinsjesdag) on September 19. With inflation having been a key issue in the past year, the Dutch government will most likely be keen to roll out economic reforms designed to tackle the problem.
Ukraine war behind fall in Dutch purchasing power
The key factor behind the sharp decline in purchasing power throughout 2022 was the Russian invasion of Ukraine and the economic turmoil that came with the conflict. The price of key commodities such as oil and gas led to higher utility bills in the Netherlands, which caused inflation to climb.
According to Statistics Netherlands, some low-income households in the Netherlands saw their purchasing power increase due to a number of available allowances – namely, the energy allowance (energietoeslag) of 1.300 euros. The CBS also said that the 190 euro energy bill discount that almost all homes in the Netherlands received in November and December 2022 stopped the decline in purchasing power from falling even lower.