Inflation is currently at record levels. Almost 5% over one year in the euro area according to the latest figures published this week by Eurostat, the statistical office of the European Union. It is the prices of energy which explain this surge, with tariffs which increased by 27.4% over one year.
In detail, some countries of the European Union are experiencing a much greater price increase than others.
The Baltic countries hold the euro zone inflation record. + 9% for Lithuania for example. Germany is experiencing a 6% surge in consumer prices over one year. Notably because during the pandemic, the largest economy in the euro zone lowered its VAT rate. It has since been brought back to its pre-crisis level, which automatically inflates prices.
France is below the euro zone average: with an increase of 3.4% over one year, according to the consumer price index, which allows comparisons between countries. In Europe, we are well beyond the good level of inflation decreed by the European Central Bank, which is around 2%.
Does this mean that the ECB will change its monetary policy to lower prices? Not if it judges that this inflation is temporary, that energy prices will eventually stabilize, that the shortage of raw material components will eventually pass, as will soaring maritime transport tariffs.
The OECD in its latest statistics also leans for this analysis with a peak of inflation which would be reached at the end of 2021.
The surge in prices is also unprecedented on the other side of the Atlantic: above 6% over one year, which worries the president of the FED, the powerful American central bank. Jerome Powell fears inflation that sets in over time and is considering raising key rates, which would raise interest rates and slow consumption.
So much for the current panorama, unless the Omicron variant comes once again to reshuffle the cards of the global economy in the coming weeks.