Inflation at 10% puts pressure on European leaders

Europe 1 with AFP 3:46 p.m., September 30, 2022

Inflation in the euro zone jumped again in September to 10% year on year, a new high fueled by soaring energy and food prices, which put European leaders under pressure to act more quickly and stronger.

The figure "is horrible from all points of view", said Bert Colijn, analyst for ING bank.

In any case, it exceeds the already gloomy forecasts of Bloomberg and Factset analysts who expected 9.7%.

Inflation had reached 9.1% in August for the 19 countries sharing the single European currency, already the highest since the European statistics office began publishing the indicator in January 1997.

This double-digit increase, also a major first, was published as European energy ministers finally reached an agreement on emergency measures to help households and businesses in the face of soaring bills, but many believe that we must go even further as winter approaches.

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They validated proposals presented in mid-September by the European Commission, aimed at recovering part of the "superprofits" of energy producers to redistribute them to consumers, and imposing a reduction in electricity demand at peak times. .

"We can expect government intervention to intensify due to soaring inflation rates," said Bert Colijn, who deplored "a confused situation in the euro zone" because national measures "do not are not coordinated in Brussels".

European slowness

The slowness of European institutions in the face of the urgency of the crisis has pushed EU member states to act out of order.

They fear yellow vest-type social movements and thousands of industrial job cuts.

European employers warned on Thursday that high gas and electricity prices were threatening the survival of thousands of businesses in Europe.

Chancellor Olaf Scholz announced on Thursday "a shield" to cap energy prices, endowed with 200 billion euros.

Paris has adopted consumer protection measures, including a drop in fuel prices in September, which has allowed it to maintain the lowest inflation in Europe, at 6.2%, according to harmonized data. from Eurostat.

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Germany is at 10.9%.

The Baltic countries, particularly exposed to the consequences of the war in Ukraine, suffer from the highest inflation.

It reached 24.2% in Estonia, 22.5% in Lithuania and 22.4% in Latvia.

Since November 2021, consumer price inflation has reached a new all-time high every month, a phenomenon first linked to supply chain disruptions and the energy price shock which has worsened with the consequences of Russia's war in Ukraine.

And there is still no light at the end of the tunnel.

Jessica Hinds, an analyst at Capital Economics, estimates that "inflation will increase further in the coming months" because rising wages are also pushing up the price of services.

Eurostat also announced on Friday an unemployment rate at its lowest in the euro zone, at 6.6% of the active population, likely to maintain pressure on wages.

In an attempt to curb the phenomenon, the European Central Bank (ECB) raised its key interest rates in September by 0.75 percentage point, after a first increase in 11 years of 0.50 point announced in July.

ECB President Christine Lagarde warned on Monday that she would raise rates further in the coming months.