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Price increases in June: Inflation in the euro zone reaches a new record high of 8.6 percent

2022-07-01T11:16:17.961Z

The massive increase in the price of petrol, gas and electricity has pushed inflation in the euro area to a new record level. In the energy sector alone, prices rose by more than 40 percent year-on-year.



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Expensive refueling: According to the ADAC, an average of 1.904 euros was due for a liter of Super E10 in the first half of the year

Photo: IMAGO/Wolfgang Maria Weber

Can this still be caught?

Eurozone inflation hit a new record in June at 8.6 percent yoy.

According to the statistics agency Eurostat, inflation will continue to be driven by high energy and food prices as a result of the Ukraine war.

The inflation rate in the 19 euro countries had rushed from record to record in the past few months – it was 8.1 percent in May and 7.4 percent in April.

The energy sector continues to be particularly hard hit by inflation.

Prices rose 41.9 percent year-on-year.

Food, including alcohol and tobacco, increased by 8.9 percent in June, according to the statisticians.

A current analysis of fuel prices by the ADAC also shows how much energy is a burden on consumer prices.

The first half of 2022 was by far the most expensive at German gas stations due to the war in Ukraine.

On average over the six months, a liter of Super E10 cost 1.904 euros and a liter of diesel 1.912 euros.

That's 46.2 cents more for the E10 than in the same period last year, and even 60.8 cents for diesel.

Around 20 percent inflation in the Baltic States

If you look at inflation in the euro area as a whole, the inflation rate there has never been so high since the common currency was introduced as book money in 1999. Inflation has increased continuously since the summer of 2021, with record levels recently being reached.

The war in Ukraine and the tough corona measures in China exacerbated the upward trend in prices.

In contrast, the core rate of inflation, which does not take into account volatile prices for energy, food and luxury goods, fell slightly from 3.8 percent in the previous month to 3.7 percent in June.

Economists had expected 3.9 percent.

The highest inflation rates were again in the Baltic States.

In Estonia, for example, the annual rate rose to 22 percent, in Lithuania to 20.5 percent and in Latvia to 19 percent.

They border directly on Russia and are particularly affected by supply disruptions.

France, on the other hand, is doing relatively well with inflation of 6.5 percent,

For Germany, Eurostat indicated inflation of 8.2 percent - this is calculated somewhat differently than the Federal Statistical Office does.

The authorities in Wiesbaden had indicated that inflation in Germany in June was expected to be 7.6 percent on Wednesday.

Expected high point in autumn

“Price inflation in the euro area has picked up speed in recent months,” commented Christoph Weil, an economist at Commerzbank.

»The inflation rate will probably only reach its high point in the autumn.« Energy prices are likely to remain high in view of the Ukraine war.

"At the same time, the range of goods is limited by the ongoing material and delivery bottlenecks, which are likely to be exacerbated by recent corona-related plant closures in China," writes Weil.

The European Central Bank (ECB) is aiming for an inflation rate of two percent.

In the euro zone, the ECB is expected to raise interest rates in July.

It is lagging behind not only the US central bank, but also other European central banks.

"It's making you tear your hair, inflation rates are climbing month by month and the ECB will not raise the key interest rate until July 21," comments Thomas Gitzel, Chief Economist at VP Bank.

"ECB boss Christine Lagarde has not yet indicated that there will be a major rate hike of 50 basis points in July."

Apr/AFP/dpa

Source: spiegel

All business articles on 2022-07-01

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