Price pressure and digital-euro expectations send different signals in Europe
Dutch inflation accelerated in July while a ZEW survey found German companies expect limited business effects from the digital euro, pointing to different layers of the monetary agenda.
Economics & Markets··Midday
July prices in the Netherlands
CBS reported that consumer goods and services in the Netherlands were 3.2 per cent more expensive in July than a year earlier. The annual rate had been 2.9 per cent in June and the flash estimate was 3.1 per cent. Prices rose 1.6 per cent from June to July. On the harmonised measure, Dutch inflation was 3.0 per cent, above the euro-area average of 2.9 per cent. Motor fuels were 22.0 per cent more expensive than a year earlier, following a 17.3 per cent annual increase in June. Energy prices rose 1.1 per cent after falling 1.8 per cent in the previous month. CBS said import duties on consumer goods ordered from outside the European Union also added upward pressure. Rent growth eased from 4.7 per cent to 4.3 per cent. Harmonised services inflation was 4.0 per cent against 3.3 per cent for the euro area, while non-energy industrial goods were 1.2 per cent against 0.9 per cent. These details show that the headline 3.2 per cent came from a price picture involving fuel, energy, services and rent rather than one item alone.[1]
How companies view the digital euro
In ZEW's representative survey of about 800 German companies, 77 per cent said the European Central Bank's digital-euro plans would have no effect on their business. Some 17 per cent expected negative or somewhat negative effects, 6 per cent somewhat positive effects and 0.7 per cent positive effects. The study covered firms in manufacturing and the information economy. Awareness of the plans rose from 55 per cent in January 2024 to 60 per cent. Even so, 32 per cent of companies expected to have to adjust their own operations. Among firms with 100 or more employees, the share expecting positive effects approached 3 per cent. Vincent Rost of ZEW's Digital Economy Research Unit said part of the scepticism might reflect the many unanswered questions around the digital euro. The survey does not say that companies ignore the plan: awareness rose and some firms expect operational adjustment. Yet the dominant answer is that the expected direct business effect will be limited. It presents a picture in which the design discussion around digital payments and companies' present planning horizon are not moving at the same speed.[2]
Two layers of the monetary agenda
CBS and ZEW are not describing the same economic event. CBS measures current price movements facing households and businesses in the Netherlands: 3.2 per cent annual inflation, a 22.0 per cent rise in motor fuels and services inflation above the euro-area average. ZEW measures company expectations about a digital-payments arrangement not yet in operation: 77 per cent expecting no impact, 32 per cent expecting adjustment and 60 per cent awareness. The two sources nevertheless make two layers of the monetary agenda visible together. The first is measurable pressure entering current budgets through prices and import duties. The second is the more uncertain expectation of when and how the European Central Bank's digital-euro plan may enter company operations. This is not investment or policy advice. The narrower conclusion is that the inflation release tracks realised prices, while the digital-euro survey tracks expected institutional effect. The percentages belong to the same monetary area but are not substitutes: one describes July's price level and the other companies' view of a future payment infrastructure.[1], [2]
