Inflation rate falls sharply in March, food prices remain high

Inflation in the Netherlands fell sharply in March 2023, to 4.5% from 8.9% in February. This was mainly due to a decline in energy prices, which were 28.2% lower than a year ago. 

Nevertheless, upward price pressure in other areas is still substantial. Food price inflation is high at 15.1% and core inflation (inflation excluding food and energy) is also still high at 7.6%. Services prices rose by 6.6% and industrial goods by 8.8%. Together, these items have an upward impact on inflation of just over 5%.

Food price inflation remains high

In March 2023, as in February, food was 15.1% more expensive than in 2022. Food price inflation seems to peak at this level. The fact that food price inflation did not rise further does not mean that groceries did not become more expensive last month. If you look at the absolute price level, you will see that supermarket prices at the end of March were on average about a 0.5 percentage point higher than at the end of February. Product categories such as crisps, fruit juices and pastries showed an average price increase of roughly 2-3% last month. In contrast, categories such as margarine and vegetable oils decreased in price by about one per cent. 

Food prices to rise further

Rabobank expects food prices to rise further on average over the next three to four months. The pace of price increases will be considerably slower than at the end of 2022 and the dynamics will vary from category to category. But food producers, supermarkets, speciality shops and the hospitality industry have not yet passed on all cost increases and previous producer price increases in their prices and they will continue to do so. Still, the inflation rate is expected to fall. This is due to the basis of comparison. Last April, groceries became about 2% more expensive in a one-month period. As long as the average price increase stays below that over the next four weeks, CBS will present us with lower food price inflation around 1 May.

Rabobank.nl