The price of spaghetti has risen by 37 percent in one year. Toilet paper is 30 percent more expensive, butter also 30 percent, semi-skimmed milk 25 percent and ground coffee 21 percent.
The price increases are not limited to the supermarket. An americano on the terrace is also a must, let alone calling in a plumber or house painter. Fortunately, a cauliflower and a bunch of carrots can still be bought on offer for 1 euro, and two kilo bags of floury potatoes for 3 euros, so that inflation in July was limited to 10.5 percent.
Nevertheless, this has left many people in acute financial distress. Every day in the media, between all the squabbling about the reception of asylum seekers and demonstrating farmers, the Dutch also say that they can no longer make ends meet without cutting back on basic necessities. They now eat twice instead of three times a day.
It FD Thursday even had a story about the needs of the higher incomes who now have to make do with ‘one cheese instead of three’, because the energy bill of the luxury farmhouse has risen from 900 to 1,600 euros. ‘High incomes also have high costs, that is sometimes forgotten’, it said.
It is clear that no one personally wants to be made worse by crises, be it a pandemic, the war in Ukraine, the influx of refugees or climate change. And that means that the government has to make up for the loss of purchasing power. Unfortunately, that government is the same taxpayer that is being duped by inflation. So basically every purchasing power repair is vest pocket trouser pocket. At the most, the government could redistribute the burden by collecting more money from the high incomes and giving it to the low incomes, but that is virtually impossible in a country with the VVD as the permanent governing party.
So far, the government has passed the bill to the future generation of taxpayers by increasing the national debt. With an interest rate of zero percent, that was lucrative, but now that interest is rising. This week, the cabinet therefore put the bill on the employers’ plate. They have to repair purchasing power by raising wages. The collectively agreed wage increase of 3.5 percent is far behind inflation. In fact, wages – coupled with benefits – should rise by 10 or even 20 percent to maintain purchasing power.
But that is not allowed by Olaf Sleijpen, director of monetary affairs and financial stability at De Nederlandsche Bank, who in NRC warned that this will set in motion the deadly wage-and-price spiral. Employers will pass on wage increases in prices. Only appropriate wage increases are allowed, to which Sleijpen unfortunately did not link a number. But he means that wages should be allowed to rise so much that only corporate profits suffer. But those profits mainly go to the complaining pensioners, because the pension funds are the largest shareholders.
The only real solution is not to eat pasta for the time being, but only floury cauliflower, carrots and potatoes. Well buy now.