Inflation is becoming a purchasing power killer

The high Dutch inflation is becoming a purchasing power killer
Inflation reached 5.2 percent in November, a height that has not been seen since 1982. The price increases - especially energy - will continue to work firmly in purchasing power next year. This hefty money devaluation is eating the purchasing power.

The inflation ghost
Should we be concerned about high inflation? Arnoud Boot, professor of financial markets, explains the current state of the economy. “Of course, the financial markets are suspicious, there is uncertainty. Then there is a relatively high risk. Small business can cause major shocks in the financial market.“The fear of hyperinflation is not real as far as he is concerned. “You must willingly plunge your economy into incredible chaos to create hyperinflation, or you come out of a giant war.'

Macro economist and BNR commentator Kees de Kort sees the seventies looming with increasing inflation. “In principle, inflation is not good for an economy, because it leads to weird movements. An economy benefits from trust in the future, big shocks like now lead to nervousness.“Is inflation going down again, as some central bankers say and hope? Of course, inflation is going down again, but how temporary is temporary? De Kort wonders. At the moment, energy prices are rising sharply, according to De Kort, a direct result of supply-demand ratio in the global energy market. “Parties are going to conclude collateral contracts, and there is not much stretch in the global energy system.Another component of inflation is the disruption of the production and distribution chains, although it will recover. The danger of current inflation is that there may be a wage price spiral. De Kort calls this an unpleasant development and involuntarily has to think back to the 70s. Finally: inflation combined with free money as it is now? That's gonna wring. De Kort's drug: a cold turkey.