Headline inflation in the Netherlands dropped significantly in January, marking the fourth consecutive month of deceleration. The Harmonised Index of Consumer Prices (HICP) fell from a revised 2.7% YoY in December to 2.2%, largely driven by a decline in core inflation to 2.4%, slightly below projections. This positions inflation in line with the 2% target for 2026.
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The slowdown was primarily due to weaker price growth in services, food, and industrial goods. Services inflation decreased from 4.3% to 3.6% YoY, despite a VAT increase on accommodation from 9% to 21%. Food and beverage inflation moderated sharply to 2.0% from 3.1%, while non‑energy industrial goods fell to 0.6%.
The only category experiencing acceleration was energy, which rose from -0.4% to 0.4% YoY, reflecting a fuel excise duty hike at the start of the year. The government plans further gradual fuel duty increases, though the timeline remains uncertain under the incoming minority coalition government.
Overall, the easing of core inflation bodes well for the remainder of 2026, though risks remain. Business selling price expectations have climbed to their highest level in a year, and indirect effects of the ongoing trade war could exert additional price pressure.
Marcel Klok, ING Senior Economist, Netherlands, notes that while headline numbers are on track with targets, fuel duty developments and external trade dynamics will be key factors to watch in the coming months.
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ING
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