The corona crisis has made life much more expensive in recent months, and experts say that will not come to an immediate end.

Jack Dorsey, the CEO of Twitter, even expects hyperinflation worldwide.

This means that prices are rising so fast that normal things become unaffordable, which has already happened in Venezuela in recent years.

However, economists think that things will not go so smoothly in the Netherlands.

"Hyperinflation is going to change everything. It's happening," Dorsey wrote on Twitter on Saturday.

In a subsequent tweet, he wrote: "It will happen soon in the US. And so in the rest of the world."

He doesn't hope it will come to that, but rising inflation (the degree to which life becomes more expensive) worries him.

Last year, life worldwide became 3.2 percent more expensive.

In the Netherlands we paid an average of 1.3 percent more for everything in 2020.

In September, inflation in our country rose by 2.7 percent, partly as a result of high energy prices.

@oviosu It will happen in the US soon, and so the world.


Author jackMoment of places02: 22 - 23 October 2021

'Insulation and sustainable energy make life more expensive'

Economists agree that the rise in the cost of living is not over.

In the long term, Steven Brakman, professor of macroeconomics at the University of Groningen, sees the energy transition in particular as an important reason for rising inflation.

"In the coming years, everyone will have to spend a lot more on insulation and heat pumps, which will lead to more costs," says Brakman.

"We will have to learn to live with that, because it is a necessary transition. At the same time, the nitrogen crisis will mean that we have to produce our food in other ways. So that will also make life more expensive."

In addition, the aging population has an impact on inflation.

"The Netherlands is aging more and more, which means that the working population is shrinking. In addition, there are now staff shortages everywhere. Both of these factors will drive up wages and companies ultimately pass this on to their customers," says Brakman.

"In addition, companies will spread their suppliers more around the world to avoid delays if things go wrong at one company. That makes the production process and ultimately the end product more expensive."

Euro is too stable for hyperinflation

But hyperinflation, in which life becomes more than 50 or 100 percent more expensive in one fell swoop, is not something Brakman sees happening right away.

"The European Central Bank (ECB), which oversees the euro, keeps a close eye on all price increases and takes action if necessary, for example by raising interest rates."

At a higher interest rate, people spend less because their money yields more in a savings account.

That pushes prices down.

Macro-economist Nora Neuteboom of ABN AMRO also does not think inflation will get out of hand any time soon.

According to her, such a thing can only happen if a currency depreciates significantly.

"Suppose a currency halves in value against another currency, then that country has to pay twice as much to import goods. That is then passed on to the customer and inflation rises. But the euro and the dollar are such stable currencies that that won't lose their value right away."

Neuteboom expects inflation to rise until 2022, in line with commodity shortages.

After that, it will decrease again slightly.