Inflation is expected to be 3.1 percent this year, according to the latest forecasts from the Planning Bureau. This is slightly lower than the previous forecast in April, which had predicted an average annual inflation rate of 3.3 percent. Despite this, inflation rates have been consistently increasing over the past few years, with last year’s rate standing at 4.06 percent on an annual basis and 9.59 percent in 2022.
Looking ahead, the forecast for next year is an average annual inflation rate of 1.9 percent, which is a significant decrease from previous years. However, it’s worth noting that the health index, which is used for the indexation of wages, social benefits, and rental prices, is also expected to be 3.1 percent this year and 2.0 percent in 2025. Last year, the health index was 4.33 percent and in 2022 it was 9.25 percent.
In April, the key index for government wages and social benefits was exceeded leading to adjustments of social benefits in May by two percent and government employees’ wages in June by two percent to account for the increased cost of living. The Planning Bureau anticipates that there will be another exceedance of the central index next February based on current projections.
Overall, while inflation rates are expected to decrease slightly in the coming year, it’s important for individuals and businesses to continue planning for future increases in costs as these may still occur despite forecasts indicating otherwise.
Inflation has been a major concern over recent years with many countries experiencing high levels of inflation due to various factors such as supply chain disruptions caused by COVID-19 pandemic or geopolitical tensions leading to higher energy prices among others.
The Planning Bureau has acknowledged that inflation has been a significant challenge for governments across different regions and they are working closely with other stakeholders such as central banks and financial institutions to develop policies that can mitigate its impact on people’s lives.
It’s important for individuals and businesses alike to plan ahead for potential inflationary pressures as even small changes can have a significant impact on their finances.