“The Dutch consumer has been particularly reluctant in the first half of this year. On balance, consumption hardly got out of his place,” the economists say in a report on Friday. They will only expect consumers to make a more substantial contribution to economic growth next year.
According to them, the main reason for consumers’ restraint is a lack of trust, which was considerably fell back in the second quarter. In addition, they identify with Dutch people uncertainty and inflation expectations that stand in the way of Kooplust.
High inflation
Scientific research is known that high inflation is pressing consumer confidence. Not only the level of total inflation is important, but also the expectations of how the depreciation will develop.
“High inflation expectations can ensure that consumers are concerned about the purchasing power of their income in the future and therefore put aside aside as a precaution,” the researchers said.
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It also matters for those inflation expectations which products rise sharply in price. In particular, price increases with often purchased products, especially nutrition, can touch the mind of consumers.
Moreover, consumers respond to feelings of uncertainty by wanting to set aside more money and make purchases less easily. That uncertainty can also be due to global developments, says ING. “Such as international conflicts, changes in foreign governments and trade policy.” In short: the conflicts in Ukraine and Gaza and the trade war of President Trump can also feed that uncertainty and affect the willingness to buy.
Good news
The good news is that the uncertainty among consumers has fallen for the third month in a row. This is apparent from an index that keeps track of the European Commission.
“That means that there appears to be decreasing uncertainty among consumers. The trade war, which will have contributed to extra uncertainty earlier this year, seems to have come in some more calmer waters after the trade deal between the US and the EU,” said ING economists.
They believe that the inflation expectations of consumers also seem to be over their recent peak. Only there is no big cover. “Energy inflation will probably turn out beneficial, but the price increases of foods are expected to remain relatively high during the rest of this year.”
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According to ING, the uncertainty also keeps many consumers in the grip. “Although it has decreased, we are not at the levels of before the energy crisis and the raid in Ukraine. The uncertainty among consumers is slightly higher than last summer, when trust among consumers had a revival.”
Although the consumer has more to spend this year, he has not yet increased his spending in the first half. For the rest of this year, the consumer will gradually abandon his caution.