The prices are out of control in Europe and the bulk of analysts assume that they will continue to rise during the summer months. The year-on-year inflation rate in the euro zone soared to 8.6% in June, that is, it rose five tenths compared to May. This rebound represented the highest increase in prices in the euro zone in the entire historical series and exceeds the price stability target of 2% set by the European Central Bank (ECB) by more than four times, as confirmed on Tuesday by the Community Statistical Office, Eurostat.
In addition, in the European Union (EU) as a whole, the rise in prices accelerated in June to an even higher level, up to 9.6% from 8.8% in the previous month and well above 2, 2% registered just 12 months ago.
Prices rose, mainly due to the pressure exerted by the energy components and the shopping basket. The rise in prices in the euro zone during last June was based on the 42% year-on-year rise in energy prices, which accelerated from 39.1% in May. The shopping basket also pushed upwards after noting an increase in the price of fresh food of 11.2% year-on-year, when in May it had been 9%.
At the same time, services became more expensive by 3.4% year-on-year, one tenth less than the previous month, while the prices of non-energy industrial goods rose by 4.3%, compared to 4.2% in May.
Excluding the impact of energy from the calculation, the year-on-year inflation rate in the euro zone stood at 4.9% in June, compared to 4.6% in the previous month. For its part, after excluding the effect of the prices of fresh food, alcohol and tobacco, the core inflation rate stood at 3.7%, one tenth below the record of 3.8% registered in May.
The Governing Council of the European Central Bank (ECB), which will meet next Thursday, July 21, plans to raise interest rates by 25 basis points to deal with this inflationary scenario. The next rate hike will come in September, although in this case it could reach 50 basis points.
More than 10% in Spain
Among the Twenty-seven, the inflation rate accelerated in June in all countries, except in Germany, where it fell to 8.2% from 8.7%, and the Netherlands, where it went to 9.9% from 10, 2% of May. The largest price increases in the EU were registered in Estonia (22%), Lithuania (20.5%) and Latvia (19.2%), while the least strong increases were registered in Malta (6.1%), France (6.5%) and Finland (8.1%).
Twelve other EU members posted double-digit price increases, including the Czech Republic (16.6%); Bulgarian (14.8%); Poland (14.2%); Romania (13%); Hungary (12.6%); Slovakia (12.6%); Greece (11.6%); Slovenia (10.8%); Belgium (10.5%); Luxembourg (10.3%); and Spain (10%), while the Netherlands (9.9%); Ireland (9.6%); Cyprus and Portugal (9% each) registered rates of at least 9%.
In the case of Spain, the harmonized inflation rate stood at 10% in June, compared to 8.5% in May, widening the unfavorable price differential with respect to the eurozone average to 1.4 percentage points. The Spain's CPI rate thus reached 10.2% in June for maximum brands since 1985. Products such as fuels, which increased in price by 40.7%, or hotels, which shot up 45% at the beginning of the summer campaign, sent the CPI over two digits.
The shopping basket also suffered from the increases triggered by other components, such as electricity or transport, with foods, such as edible oils, which are already 87.5% more expensive than just a year ago.
FALL IN CONSUMPTION
Analysts predict high inflation between now and the end of the year in Spain, in line with the trend in Europe. According to the forecasts presented this Monday by Funcas, the inflation rate will end the year in Spain at 8.8% and will remain high in 2023, at an average level of 5%. The growth gap between internal and external prices will cause the shock of imported prices to be "the largest experienced in our country since the 1970s," the director of the International Situation and Analysis of Funcas, Raymond Torres, warned yesterday.