Inflation is hitting 10% in the euro zone

Inflation is hitting 10% in the euro zone

Inflation is hitting 10% in the euro zone

In a supermarket, in Lille, on 30 August 2022.

Inflation has no respite in the euro area. In August, the rise in prices stood at 9.1%, against 8.9% the previous month (and 3% a year ago), according to data published on Wednesday 31 August by Eurostat, the European statistical agency. “Inflation will reach 10% by the end of the year”said Jack Allen-Reynolds, an analyst at research firm Capital Economics. France, on the other hand, had a slight respite in August: the rise in the harmonized price index (which allows for European comparisons) was only 6.5% in August, compared to 6.8% in July.

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Since the start of this surge in inflation, energy remains the main explanation for the rise (+ 38.3% in one year, despite a slight decline compared to July), while the increase in foodstuffs in the area euro, exceeded 10% mark for the first time (+ 10.6%). More worrying, a sign that the phenomenon is spreading to all sectors, so-called core inflation (excluding food, tobacco, alcohol and energy, more volatile sectors) reached 4.3%, compared to 4% in July (and 1.6% per year ago).

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“In a month, energy prices stagnated, following the drop in the barrel of oil, but this is probably only temporary, given the uncertainties about gas supplies, said Pushpin Singh, an economist at the Center for Economics and Business Research. With food inflation and this summer’s drought affecting agricultural production, the outlook is bleak for the Eurozone. “

Disparity between countries

Another trend is that the inflation rate tends to fragment within the euro area. The Baltic countries continue to experience almost uncontrolled inflation, over 20% (of which 25% in Estonia). The large countries of northern Europe are also in a strong upward trend. Belgium (+ 10.5%) and the Netherlands (+ 13.6%) recorded increases of over 1.5 points in August alone. Germany, the largest economy in the region, recorded an 8.8% price increase, up from 8.5% in July.

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Some countries, on the other hand, are experiencing a first decline, thanks to the drop in the price of oil during the summer. Among them, Greece, Portugal or Spain. France is also part of this group and remains the country in the euro zone where inflation is lowest, thanks in particular to the tariff shield. This should continue to play in full swing over the next few months, especially as the fuel price discount passes Thursday 1uh September, from 18 euro cents to 30 euro cents per liter.

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