Inflation in the Netherlands rose slightly in August. The average price increase was 1,4%, compared to 1,3% a month earlier. In August 2016, inflation was almost nil at 0,2%. Business Insider reported this on Thursday, September 7.
The measured figure concerns the so-called 'consumer price index', a basket of goods whose price developments are monitored. Statistics Netherlands (CBS) notes that other price indicators, such as rents, prices of owner-occupied homes and share prices, are not included.
According to Statistics Netherlands, the slight increase in the rise in consumer prices was mainly due to the price development of clothing and car fuels. On an annual basis, these rose faster in price than in the month of July.
Savers face higher inflation
While inflation has risen in the past year, savers do not yet see interest rates moving along. The highest variable savings interest rate remained at 2017% in August 0,50, according to data from the site savings information.nl.
Inflation in August was higher than the highest variable savings rate, namely 0,9 percentage point. The savings in freely withdrawable savings accounts are worth less due to inflation. This is because the so-called real interest rate (the savings interest minus inflation) is negative.
The situation for savers is dramatic, because the savings rates for deposits where the savings are tied up for a longer period of time are also low. For example, the highest savings rate for money that is fixed for 1,5 years is 0,65% and even then you still have a negative real interest rate. Only when savings have been secured for at least 6 years, the savings interest is high enough to compensate for the price increase.
Tax on wealth
There is also the tax on wealth. The starting point for savings and investments taxed in box 3 is an exemption of €25.000 per person. You then pay 100.000% tax on the assets up to €75.000 (i.e. the amount of €0,87 that exceeds the exemption). On the amount between €100.000 and €1 million, the effective levy is 1,41% and above €1 million the levy is 1,65%.
In order to retain the value of assets subject to the tax in box 3, a return of at least 25.000% is required for an amount between €100.000 and €2,27. That is unfeasible with the current deposit rates for savings.
Read more on Business Insider:
Eurozone inflation is rising, but don't count on the ECB to raise interest rates soon
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Almost no interest on your savings at the bank – at Triodos customers don't mind
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