Monday, March 27, 2023

European inflation rises to record 7.5 percent on fuel, food costs

LONDON ( Associated Press) – Inflation in Europe hit another record, according to new EU data released on Friday, in a new sign that rising energy prices from Russia’s war in Ukraine are squeezing consumers and pushing interest rates down. Increasing pressure on the central bank to increase

According to the European Union’s statistics agency, Eurostat, consumer prices in 19 countries that use the euro currency rose at an annual rate of 7.5 percent in March.

The latest reading broke the high set last month, when it peaked at 5.9 percent. This is the fifth consecutive month that inflation in the eurozone has set a record, bringing it to the highest level since record-keeping began for the euro in 1997.

Rising consumer prices are a growing problem around the world, making it difficult for people to afford everything from groceries to their utility bills. Eurostat said rising energy costs are the main factor driving inflation in Europe, with prices rising 44.7 percent last month, up from 32 percent in February.

Oil and gas prices were already rising due to increased demand from economies recovering from the depths of the COVID-19 pandemic. They jumped higher after Russia, a major oil and gas producer, invaded Ukraine, fearing sanctions and export restrictions could reduce supplies.

Read more: EU accuses Russia of ‘war crime’ in Ukraine, but unlikely to impose new sanctions

Eating it in Europe is also becoming more expensive. Food costs, including alcohol and tobacco, increased by 5 per cent, compared to 4.2 per cent in the previous month.

Mina Agib, who runs an Egyptian restaurant called Mea Maya in Berlin, said prices for oil and meat frying have recently risen from 70 percent to 100 percent.

“Who’s not impressed?” Agib replied, when asked if he was feeling the effect of rising prices.

Two weeks ago, one of his suppliers said meat prices would rise by 70 euro cents (77 cents) per kilogram, Agib said. “They told us to expect another increase next week.”

To avoid losing money, Agib has to increase the price of some dishes. One customer, annoyed at paying half a euro more for a plate of shredded meat, dips and salad, posted a negative online review – the first since her restaurant opened a year ago.

“We are between a rock and a hard place,” he said. “We want to keep the customers happy with high quality ingredients and home cooked food. But we also have to pay the prices that our suppliers ask for. ,

At an outdoor market this week in Cologne, Germany, shopper Andreas Langheim also lamented how life was getting more expensive.

“I can see the impact of the price hike, especially here in the market,” said 62-year-old Langheim, picking up bread from a bakery van. “Everything is more expensive now.”

Prices of goods such as clothing, appliances, cars, computers and books also rose, up 3.4 per cent from 3.1 per cent set a month ago and for services 2.7 per cent from 2.5 per cent.

Analysts said the latest figures make it more urgent for the European Central Bank to step aside and act. The bank is balancing record inflation with the threat that war could damage the economy under pressure. Last month, it accelerated exit from economic stimulus efforts to tackle inflation, but did not take more drastic measures.

“We think the ECB will soon come to the conclusion that it cannot wait any longer before raising interest rates,” Jack Allen-Reynolds, senior Europe economist at Capital Economics, said in a report.

Central banks, including the US, have started raising rates, with inflation hitting a 40-year high of 7.9 percent. European countries that do not use the euro, including Britain, Norway and the Czech Republic, have done the same.

Watch: Military leaders testify before House committee on US activity in Europe

Italian Premier Mario Draghi, former president of the European Central Bank, explained how the problem comes to homes.

“Inflation is rising because prices of raw materials are rising, especially for food items. They are what most affect a family’s purchasing power,” Draghi told foreign reporters on Thursday. The shortage creates a bottleneck in production and further increases the prices.”

Draghi said that as long as inflation remains temporary, governments can respond with budgetary measures, such as payments to help low-income households with higher heating and electricity costs. But if it becomes a long-term issue, the response should be structural, he said.

Italy’s construction industry has sounded the alarm over how inflation threatens jobs at thousands of public and private construction sites. It warned that the sector could not only slow down but come to a complete halt due to rising fuel and raw materials costs, including iron, reinforced concrete and steel, which have doubled in price.

Associated Press journalists Frank Jordan in Berlin, Daniel Niemann in Cologne, Germany, Frances D’Amilio in Rome and Colleen Barry in Milan contributed to this report.

Nation World News Desk
Nation World News Desk
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