Eurozone Inflation Reaches Record 7. 1% in May
Fallout from COVID policies working economies across globe
Inflation in the 19 countries from the eurozone soared to eight. 1% in May from seven. 4% in April, numbers showed on Tuesday, going above previous expections.
Prices have risen sharply in yesteryear year, initially because of supply chain problems after the COVID pandemic but subsequently because of Russia’s invasion of Ukraine.
How do the figures break down?
Energy prices jumped leaped by 39. 2% because of a global energy crisis caused by the battle.
Foods prices soared by 7. 5%, while prices with regard to other goods — such as clothing, appliances, cars, computers and books — were up 4. 2% and the cost for services went up 3. 5%.
Germany’s inflation rate achieved 7. 9% in May, based on data published on Mon by the German statistical company Destatis.
Inflation in the eurozone — home to some 343 million people. — is now at its highest since records for your currency began in 1997.
Rise in interest rates on the cards
To tame price rises, the European Central Bank has already flagged up a 25 basis point increase in its minus 0. 5% deposit rate in both This summer and September.
Early in May, the US Federal Reserve raised interest rates by fifty percent a percentage point for the first time since 2000 in a bid to combat soaring inflation.
That came simultaneously the Bank of England raised its interest rates to a 13-year high.
Worries of an upward price spiral
The latest numbers mean headline inflation has become 4 times the ECB’s 2% target, and there are concerns that the rapid rise in root prices could see pumpiing become embedded.
That means prices would continue to spiral as prices plus wages become locked in to a pattern of mutual escalation.
The release of the figures coincided with data showing that France’s economy shrank in the initial quarter.
A good EU decision on Monday to immediately halt two-thirds of Russia’s oil exports to the bloc could put still more upward stress on prices.
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