- Inflation in Europe has risen to 8.6%.
- Estonia, Lithuania and Latvia are the countries with the highest inflation.
- Energy prices are the primary factor in this rise.
Inflation continues to rise in the eurozone. The Consumer Price Index (CPI) rose to 8.6% in June compared to 8.1% in May. The year-on-year comparison is significant; just a year ago inflation was 1.9%.
The countries on the inflationary podium are Estonia, Lithuania and Latvia with numbers between 22% and 19%. The most subdued rises have been in Malta (6.1%), France (6.5%) and Finland (8.1). Meanwhile, inflation decelerated in Germany (8.2% vs. 8.7%) and the Netherlands (10.2% vs. 9.95) by a few tenths but still remains high. Spain had inflation of 10% in June vs. 8.5% last May.
The main inflationary focus is on energy prices, which rose 42% with a monthly increase of 3.4%. Food, alcohol and tobacco added 8.9%, non-energy industrial goods (+4.3%) and services (+3.4%).
Excluding energy prices, inflation rose 4.9% compared to 4.6% in May.
Expectations are focused on this Tuesday’s meeting, in which the Governing Council of the European Central Bank (ECB) will discuss a rate hike of 50 basis points, to be defined at next Thursday’s monetary policy meeting, in what would be the first interest rate hike by the ECB in eleven years.
The rise in interest rates seems to be the only possible tool in both Europe and the US to try to counteract the inflationary phenomenon and achieve a cooling of the economy. The euro’s weakness against the dollar is another cause for concern, so a rate hike next Thursday would give a little more strength to the European currency.