Most entrepreneurs tend to postpone price rises

On 1 October 2012, the general VAT rate in the Netherlands was raised from 19 to 21 percent, the highest rate ever. Yet, a vast majority of Dutch entrepreneurs do not consider price rises in the next three months. Many consumers anticipate higher prices next year.

Price expectations Dutch entrepreneurs, September 2012

Retail prices expected to rise

In September, a minority of entrepreneurs expected to raise consumer prices in the next three months. With 26 percent, the highest proportion was found among retailers (26 percent). The share is significantly lower in other branches.

More consumers expect higher prices

Nearly 40 percent of consumers thought in September that prices would increase more rapidly in the next twelve months. The percentage has gradually increased over the past months. Only 2 percent of interviewed consumers expect lower prices next year.

Price expectations consumers, 2012

Inflation considerably higher after previous VAT tax increase

The last time the general VAT rate was raised was on 1 January 2001. The rate was raised from 17.5 to 19 percent. In the following months, inflation increased substantially. At the end of 2000, inflation was 2.9 percent, but in April 2001 the rate had climbed to 4.9 percent. However, the VAT increase was not the only reason for the higher inflation rate. The eco tax rate was also raised on 1 January 2001. The outbreak of the foot-and-mouth disease contributed to higher food prices in the spring of 2001. The radio and TV licence fee was abolished on 1 January 2000, which had a downward effect on inflation in 2000, but the effect had worn off in 2001.

In the second half of 2001, the inflation rate was marginally lower than in spring.

Inflation

Wouter Jonkers