Inflation Rise in Eurozone

According to the EU Statistics Office, inflation in the euro area rose by 3.4% in September from 3% in August, the highest level since the 2008 crisis.

The European Central Bank sees this as a temporary and pandemic event. Despite this optimism, rising prices in the EU have already become a serious and unpredictable problem.

As expected, in the context of the energy crisis, most energy carriers rose in price – by 17.4%, compared with a smaller increase in food prices – by 2.1%.

However, this is a general European indicator and in some countries, price increases are more significant – for example, in September inflation was 6.4% in Estonia, 6.3% in Lithuania, 5.1% in Slovakia, and 4.1% in Germany.

At the last meeting, the European Bank said it would gradually end its monetary stimulus policy aimed at supporting the economies of EU countries during the acute phase of the pandemic. According to the regulator, this policy no longer makes sense today, because due to delays in the supply chain, prices for all goods in the world are rising without any reason.

First of all, it concerns the Pandemic Emergency Purchase Program, developed in March 2020, under which the European Central Bank spends $80 billion a month. It is expected that this amount will be reduced to $70 billion in the first stage.

In addition, there is another program in the EU during the pandemic – APP (Asset Purchase Program). Its scale is relatively modest – 20 billion euro per month, so it remains unchanged for now.

Inflation is driven by post-pandemic economic growth – the eurozone economy grew by 2% in the second quarter of 2021.

In addition, pandemic unemployment in the Eurozone also decreased – employment increased by 0.5% in April-June, which means a return to the normal labor market. However, the general and often catastrophic rise in prices casts a serious shadow over these optimistic sentiments – the main problem in Europe, and not only in Europe today, is not pandemic, but unstoppable price growth and inflation.