Food prices in the Netherlands are projected to remain at their current high level of around 5%, according to the latest data from Rabobank's inflation monitor.
The impact of excise and tax increases will continue to affect food prices until at least July next year, along with higher raw material prices and costs incurred due to wage hikes, the bank noted.
Dutch shoppers paid 5% more for groceries in July compared to last year, with around half of these price increases resulting from measures taken by the previous government.
Since 1 January 2024, a higher special consumption tax on non-alcoholic beverages came into force for soft drinks and non-alcoholic beer.
Elsewhere, the excise duties on alcoholic beverages increased, along with a considerable hike in excise duties on tobacco.
The effect of the excise duty hike on tobacco had a delayed effect, as tobacco sellers were allowed to use up old stocks.
Grocery Basket
The rest of the Dutch shopping basket saw average prices increasing by 2.5% to 3% compared to July 2023, partly due to the delayed impact of higher raw material costs.
In the past few weeks, this was also seen in coffee, chocolate and potatoes, which were among the top five in terms of price increases.
Supermarkets in the Netherlands also cut down on the number of products on offer and the discounts in July.
Certain product categories also saw a decline in prices, including dairy and eggs, due to developments in raw material costs. Rabobank expects these prices to level off.
Food Inflation To Stay
Grocery prices have increased by an average of just under 0.1 percentage points every week in Dutch supermarkets for the past year and a half now.
Given the rising costs in raw material markets, especially in the food retail segment, Rabobank does not expect this trend to reverse soon.
Retailers are still processing the collective labour agreement wage increase from September last year, and the unions have already put forward their demands for a next wage increase.
Food retailers are likely to prioritise margin recovery and preservation and maintain current price levels.
Rabobank also added that there could be more action on the promotional front in September.
That could slightly mitigate the price increase of groceries this year, but for the whole year food price inflation is projected to range between 4% and 5%.
