Wednesday, October 20, 2021

Inflation hits 10-year high in France due to rising service, energy costs

Inflation levels in France hit a nearly 10-year high in September, according to preliminary data published by the INSEE statistics agency on 30 September.

French inflation rose to 2.7 percent in August from a rise of 1.9 percent. That’s slightly lower than the expected average forecast of 2.8 percent in a Reuters poll of 24 economists’ expectations, but still its highest rate since December 2011.

INSEE said its EU-reconciled consumer price index fell 0.2 per cent from August, indicating a 12-month inflation rate of 2.7 per cent, up from 2.4 per cent in August.

The increase was partly due to an uptick in services prices, which rose 1.5 percent versus 0.7 percent in August, and energy, which rose 14.4 percent versus 12.7 percent a month ago.

With the rising energy space currently at play around the world, many European countries are facing looming energy bills as gas prices soared more than 35 percent last month amid short supply and pandemic-hit countries across the globe. Demand has increased as economies grow.

In Europe, supply levels are 16 percent below the five-year average, a record low for this time of year.

The situation has prompted fears that particularly cold temperature conditions in the Northern Hemisphere do not store enough gas for winter.

This week, data from the National Statistics Institute (INE) showed that inflation levels in Spain hit a 13-year high this month, driven by, among other factors, rising energy costs, according to its government. is promoting to undertake a series of short-term temporary. “Shock measures” in an effort to reduce rising costs.

Last week, the Bank of England warned that UK inflation could exceed 4 per cent later this year, while two policymakers called for an early end to the central bank’s quantitative easing program due to mounting price pressures. .

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In Germany, the Bundesbank this week said inflation was likely to remain between 4 and 5 percent between now and the end of the year before falling in early 2022, but would still remain above 2 percent until the middle of the year.

ECB President Christine Lagarde said on 28 September that the current spike in Europe’s inflation levels is only temporary and will not prompt the European Central Bank to withdraw stimulus or “overreact” by raising interest rates.

“What we are seeing now is a phase of mostly temporary inflation linked to the reopening,” Lagarde said in a speech in Frankfurt, Germany, opening the ECB’s annual forum on central banking.

“The key challenge is to ensure that we do not overreact to temporary supply shocks that have little to no medium-term impact,” he said, adding that monetary policy also needs to nurture “positive demand forces that can raise inflation permanently”. Bank’s target of 2 percent.

Meanwhile, there are growing concerns in the United States that the Federal Reserve will begin cutting its monthly bond purchases in early November, and withdraw the extraordinary support it received after the pandemic crippled the economy.

The overall consumer price index (CPI) rose 5.3 per cent year-on-year in August, marginally lower than 5.4 per cent for the period ended July.

The Associated Press and Reuters contributed to this report.

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Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.

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This News Originally From – The Epoch Times

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