As reported on Friday by the European Statistical Office, inflation in the area euroAccording to preliminary data, it reached 8.9 percent in July. on an annual basis. This has accelerated since June when the index was 8.6%. Meanwhile, the reading was higher than expected – experts predicted that the price increase would stop at the June level.
Inflation in the euro area at a record level
Inflation in July in Poland stopped at the same level as in June, although there is nothing to be happy about here. 15.5 percent year after year means the prices The fastest growth in this century, and this inflationary plateau may prevent us from continuing or even growing. Some economists are already predicting that we will break the 20% level at the beginning of next year. – This is due to higher energy prices (new tariffs). Let’s remember that the NCB inflation target is 2.5%.
Also in the eurozone, the level of inflation is several times higher than the inflation target of the European Central Bank, which is 2%. At the beginning of July, the European Central Bank raised interest rates for the first time in a decade – by 50 basis points. Latest CPI reading, beating expectations, presses bank For further increases at the next decision-making meeting, ie in September.
In a press release, Eurostat explained that energy prices were by far the main inflation factor. And in the entire Eurozone, it rose 39.7% in July. But the prices of food and services also rose sharply – you can see that inflation is spreading far and wide. The price index excluding the more volatile food and energy prices, which reached 5%, may be a confirmation. compared to 4.6 percent a year ago.
Already three countries belonging to the eurozone have inflation exceeding 20%. These are Estonia (22.7%, in June 22%), Latvia (21% vs. 19.2% in June) and Lithuania (20.8% vs. 20.5% in the previous month).
Eurozone GDP is growing stronger than expected, but a ‘mild recession’ is looming
“The European Central Bank faces a much more difficult task – inflation is constantly increasing, and in the background there is still a risk of an energy crisis and a recession,” wrote economists at the Polish company PKO BP. So far, the European Central Bank has seemed convinced that fears of a buildup of high inflation outweigh fears of a recession.
see you later Gross domestic product In the euro area is growing, even more than expected. In the second quarter, the economies of 19 European countries grew by 0.7%. A quarter to a quarter and 4 percent. on an annual basis. Economists expected an increase of 0.2% and 3.4%, respectively.
It looks good, but economists think it might actually be last moments These increases. “The acceleration of economic growth is mainly due to the effect of reopening [gospodarki po lockdownach – red.] It hides weakness resulting from high inflation and production problems. From then on, we expect GDP to continue its downward trend as the reopening of services weakens, global demand declines and purchasing power continues to decline. We expect this to lead to a mild recession starting in the second half of the year.” Reuters Economist ING Bert Colijn.
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