The rise in energy prices has pushed inflation in the euro area to a new record high. According to the Eurostat statistics office, consumer prices rose by an average of 8.6 percent year-on-year in June.
This even exceeded the expectations of economists, who had forecast an inflation rate of 8.4 percent. Inflation was already 8.1 percent in May and 7.4 percent in April.
According to an initial inflation estimate by According to Eurostat, energy prices climbed 41.9 percent year-on-year in June, after a price surge of 39.1 percent in May. The prices for unprocessed food rose by 11.1 percent in June, services rose by 3.4 percent.
Prices rose across the board, as in the previous month. This shows the so-called core rate, which excludes the volatile prices for energy and unprocessed food. This was 4.6 percent in June. In May, the core rate was 4.4 percent.
Far above target
The chief economist at Commerzbank, Jörg Krämer, commented on the Eurostat figures with a view to Germany: “Inflation in the euro area has again reached a new high. This would also apply to the inflation rate excluding energy, food and beverages if Germany did not reach the ninth -Euro-Ticket would have been introduced and train journeys would have been significantly cheaper.”
Inflation is now more than four times as high as the target set by the European Central Bank (ECB), which sets two percent inflation as the optimal value for the economy .
The inflation rate in the euro area has never been higher since the introduction of the common currency as book money in 1999. Inflation has risen steadily since the summer of 2021, with record levels recently being reached. The war in Ukraine and the tough corona measures in China exacerbated the price increase.
Biggest price driver: The energy costs – for industry, households and drivers alike
“The ECB should pull itself together”
Fritzi Köhler, Chief Economist at KfW-Bank, warns of further developments: “The pressure from war and Covid-related restrictions could increase in the coming months even further.” Thomas Gitzel, her colleague from VP Bank, sees it the same way: “There are currently no signs of relaxation. The delivery problems with many products will continue for a long time.”
Alexander Krüger from Bankhaus Hauck Aufhäuser Lampe takes the same line: “The inflation drama is entering the next round, the peak has not yet been reached. It will also take even longer before the all-clear signal can be given.”
Commerzbank economist Jörg Krämer sees the European Central Bank as having an obligation in view of the current situation: “The euro area has a massive inflation problem that requires decisive action by the ECB. It should pull itself together and not just raise interest rates at the next meeting in July announced by a quarter of a percentage point, but by half a percentage point.”
The ECB has already announced a turnaround in interest rates due to the ongoing surge in inflation. After years of ultra-loose monetary policy, the most important interest rates are to be increased by 0.25 percentage points each this month. For the monetary authorities, that would be the first interest rate hike since 2011. The euro central bank has also already announced further upward steps.
dk/bea (dpa, rtr)