Inflation in the United States has already peaked, or at least that has been the conclusion that many economists and analysts have drawn after meeting last week with the North American country. However, the situation on this side of the Atlantic is very different: more than half of the countries of the European Union (EU) register an annual CPI in double digits and experts assure that inflation in the Old Continent is far from cool. . The sharp rise in prices directly affects families, which will foreseeably weigh down consumption and, therefore, the economic future of the entire region. There are more and more voices that predict a quick and hard recession as a result of high inflation (and the time to deal with it). In fact, .
The annual CPI in the United States fell last month to 8.5%. , a rate not seen since the end of 1981. Despite the decline, different analysts opted for prudence. “It is too early to claim victory in the fight against high inflation,” Oren Klachkin, an economist at Oxford Economics, said last Friday.
However, the general feeling in the market since then is that . Of course, it is foreseeable that the underlying CPI (which does not weight energy prices or fresh food prices, as they are more volatile) will mark a peak in September or October of around 6.5%, according to experts from ING Economics.
In any case, the different realities experienced by the US and Europe are really striking. On this side of the ‘pond’, prices continue to rise at a rate not seen in decades in most countries. What’s more, the annual CPI rates were already in double digits last month in 16 of the 27 countries that make up the European Union (EU), that is, 59%. And if you look only at the eurozone (the countries of the bloc that have the euro as their currency), the CPI exceeded 10% in 11 of the 19.
Specifically, the highest inflation rates in July in the euro zone were registered in Estonia, Latvia and Lithuania, where they exceeded 20%. In Slovakia and Slovenia the CPI reached 12.8% and 11.7%, respectively. Likewise, in the Netherlands it stood at 11.6%, Greece was close (11.3%) and not far behind were the CPIs of (10.7%), Cyprus (10.6%) and Belgium ( 10.4%).
In Germany, the largest economy in the region, the consumer price index, although the harmonized CPI actually set a new record at 8.5%.
Thus, inflation throughout the eurozone marked last month, as confirmed by Eurostat on Thursday. And in the EU as a whole it also made a record at 9.8%.
Countries in Russia’s orbit
What is behind these strong price increases? One of the main factors is Russia’s energy dependence, which is not just a problem for Germany or the Baltic countries. Most of Eastern Europe and now pay their high prices for the war in Ukraine.
Thus, if one looks beyond the euro zone, the Czech Republic has its annual CPI rate at 17.3% (data from July). In Bulgaria it is at 14.9%. In Romania it reaches 13%. And in Hungary, which stands at 14.7%, according to the latest .
Nor are Russia and Belarus spared from high inflation rates, with the official CPI at 15.1% and 18.1%, respectively.
And the last to join the ‘club’ of double-digit inflation has been a former member of the EU, the United Kingdom. There compared to 9.4% in June. This implies that prices rose at a rate not seen since February 1982.
“Inflationary pressures will not go away quickly”
The Bank of England (BoE) has been the first monetary institution to ‘activate the alarms’. He already warned earlier this month that UK inflation is not exactly close to peaking. The BoE projected that . This is something that has not happened since 1980, that is, since the last part of the deep recession experienced in the late 70s and early 80s due to the first oil crisis.
Hand in hand with this bad inflationary omen, the Bank of England also predicted a prompt and long recession for the British economy, which will begin at the end of this year and could extend throughout 2023, always according to the central entity. As he stressed in his statement of August 4, all the macro scenarios he has drawn up “show very high short-term inflation, a drop in GDP over the next year and a marked decline in inflation thereafter” .
The prospects for the eurozone are not much better either. “These inflationary pressures are likely to be with us for some time; they will not go away quickly. Even with the ongoing, it will take some time for inflation to return to 2%,” , member of the Governing Council of the European Central Bank (ECB).
“Currently, we are seeing very high inflation rates and our last projected inflation figures were also quite high and the factors that drive inflation are not going to disappear anytime soon,” the German economist insisted.
In their latest forecasts, released in June, . The ECB will update these estimates next month, as usual, and it would come as no surprise if it went on to paint a darker horizon ahead.
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