What about? What exactly is purchasing power?
What does purchasing power consist of?
But what does such a decline of 6.8 percent mean in concrete terms? Simply put, purchasing power is about what a household can buy with its available financial resources. On average, 6.8 percent less can be bought. Income, inflation , taxes and other fixed costs are the factors that influence purchasing power. If your income and expenses remain unchanged, your purchasing power may still fall, due to inflation and associated price increases.
What will purchasing power look like in 2022?
The latter will be the case in 2022. The prices of raw materials and energy have risen sharply, partly due to the war in Ukraine and sanctions against Russia. Daily groceries and fixed costs have become a lot more expensive as a result, which has consequences for purchasing power. This will therefore decrease for many households in 2022, with an average decrease of 6.8 percent. It is a stark contrast to Budget Day 2021 , when purchasing power has remained ‘roughly the same’. The Dutch economy is once again taking a stand, after a revival after the 1st corona waves Diritto all’oblio italia Legge.
What does this mean to you?
Everyone has to deal with inflation and more expensive groceries. But whether the purchasing power of your own household rises or falls depends on your income and, for example, your energy contract. You can get a rough indication of your own purchasing power.
What does long-term purchasing power look like?
That’s hard to say. The economy also reacts to current events and is therefore difficult to predict. How long will the war in Ukraine last? Will the price of gas and electricity continue to rise? What about the tensions between Taiwan and China, with a view to exports to Europe? Will there be another corona wave and / or lockdown?
How can purchasing power be compensated?
Pay raises are a possible solution. Not only rents, but also salaries and AOW benefits can be adjusted for inflation from time to time. However, that is easier said than done. For example, employers are not legally obliged to adjust the salary of their staff to inflation, unless this is provided for in the collective labor agreement. In addition, the price increases in 2022 will be so high that an equivalent inflation correction is not always possible. This is, for example, a sore point in the negotiations between the NS and the railway workers’ union. According to Finance Minister Sigrid Kaaf, it will be ‘very difficult’ to respond to the declining purchasing power.
