Dutch inflation to stick around 5% as energy costs bite – central bank

People do their Christmas shopping before the Netherlands go into "strict" Christmas lockdown, in Nijmegen

AMSTERDAM (Reuters) – Inflation in the Netherlands is set to remain at a relatively high level of around 5% in the next two years as soaring energy costs feed into the prices of other goods and services, the Dutch central bank (DNB) said on Monday.

Inflation in the euro zone’s fifth largest economy is expected to drop to 4.9% in 2023, after jumping to 11.5% this year as Russia’s invasion of Ukraine caused a global energy crisis.

But inflation is likely to remain at 5% in 2024, the central bank said, as surging energy bills lift prices across the board and the tight labour market continues to drive up wages.

The European Central Bank last week said it expected inflation in the whole euro area to ease to 3.4% on average by 2024.

High inflation and a weakening in global trade will drive economic growth in the Netherlands down to 0.8% in 2023, before recovering to 1.6% in 2024, DNB said.

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The Dutch economy is expected to grow 4.2% this year, due to a strong recovery from its COVID-19 slump.

(Reporting by Bart Meijer, editing by Ed Osmond)