Inflation in the euro zone shoots up to its highest since 1997 | Economy

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Fuel prices at a gas station in Ronda, Malaga, on Monday.
Fuel prices at a gas station in Ronda, Malaga, on Monday.JON NAZCA (Reuters)

The rise in prices at the end of the year does not stop. The CPI in the euro zone has risen to 4.9% in November, according to Eurostat. It is the highest figure in the historical series of the European statistics office, which begins in 1997. This rise was announced. Analysts and central banks had warned. But it is no less surprising to see inflation at levels that Europe has not known for several decades.

In countries like Germany, with a public and political opinion always sensitive to price movements, the jump has been 1.4 points in a single month when its annual CPI reached 6%. Belgium stands at just over 7%, surpassed by the three Baltic countries (Lithuania, Latvia and Estonia). Spain, for its part, remains in 5.6%. The only countries in the euro zone in which one could speak of contained inflation are France (3.4%) and Portugal (2.7%).

That the increase is expected does not silence the voices of those who ask the European Central Bank (ECB) to begin withdrawing economic stimuli to lead the way towards price suppression. This same Tuesday, a few hours before the Eurostat data were released, the governor of the Slovenian central bank did so in an interview with the European edition of Politico. Although for now, the top officials of the ECB remain firm in the decisions announced for the coming months: “We made it clear that we will start raising rates shortly after we have finalized our net asset purchases. I am confident that these net purchases will continue over the next year ”, explained, also this Tuesday, Luis de Guindos, vice president of the entity, to the French economic newspaper The echoes.

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The change in the expansive monetary policy that the ECB has maintained in recent times could cool the economy, just at a time when uncertainties have skyrocketed with the appearance of a new variant of covid-19 about which much is known little. Among what is not known about this mutation of the virus is the efficacy of vaccines. “We know that current vaccines are effective so far, we don’t know. [todavía] with ómicron ”, declared this morning the president of the European Medicines Agency, Emer Cooke. This new unknown, consequently, further complicates the objective of achieving an economic policy that maintains the stimulus to consolidate a vigorous and uncertain recovery at the same time and that attempts to contain runaway prices in recent months.

The First Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calviño.

To know if the field for making decisions widens in the near future, the unknown will have to be answered as to how long prices will remain at this point. Central banks continue to bet that the rise is temporary and that into 2022 inflation will lose steam, although they have also begun to admit that the increase in the CPI is more vigorous than they originally expected. “Second round effects [que la inflación se traslade a los salarios] they are very small for now, “admit the analysts of the Dutch bank ING,” the concern about this is much smaller in the eurozone than in the United States, where wages have been growing in recent months.

Behind this increase are the usual suspects in recent months: electricity and hydrocarbons. In a word, energy. In the last year alone, the prices of this heading have increased by just over 27.4%. This level is well above other basic products in the shopping basket, such as fresh food products (1.9%) or processed food 2.6%.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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