Inflation in Europe hit a new high, according to new EU figures released on Friday, in yet another sign that rising energy prices fueled by Russia’s war in Ukraine are squeezing consumers and increasing poverty. pressure on the central bank to raise interest rates.
Consumer prices in the 19 countries that use the euro rose at an annual rate of 7.5% in March, according to the European Union’s statistics agency, Eurostat.
The latest reading broke the high last month, when it hit 5.9%. It is the fifth month in a row that inflation in the euro zone has set a record, taking it to the highest level since record keeping for the euro began in 1997.
Rising consumer prices are a growing problem around the world, making it harder for people to pay for everything from groceries to their utility bills. Soaring energy costs are the main driver of inflation in Europe, with prices jumping 44.7% last month from 32% in February, Eurostat said.
Oil and gas prices had already risen due to growing demand from economies recovering from the depths of the COVID-19 pandemic. They surged after Russia, a major oil and gas producer, invaded Ukraine over fears that sanctions and export restrictions could jeopardize supplies.
At an outdoor market this week in Cologne, Germany, buyer Andreas Langheim lamented how life was getting more expensive.
“I can see the effect of the price increase, especially here at the market,” Langheim, 62, said as he picked up bread from a bakery van. “Everything is more expensive now.” The latest figures make it more urgent for the European Central Bank to step down and act, analysts said. The bank is balancing record inflation with the threat that war could harm a strained economy. Last month, it accelerated its exit from economic stimulus efforts to fight inflation, but did not take more drastic measures.
“We believe the ECB will soon conclude that it cannot wait any longer before starting to raise interest rates,” said Jack Allen-Reynolds, senior European economist at Capital Economics, in a report.
Other central banks have started raising rates, notably in the United States, where inflation hit a 40-year high of 7.9%. European countries that do not use the euro, including Britain, Norway and the Czech Republic, have done the same.
In the euro zone, there have been price increases for other categories of expenditure than energy.
Food, alcohol and tobacco prices rose 5% from 4.2% the previous month, while prices for goods such as clothing, appliances, cars, computers and books rose. increased by 3.4%, compared to 3.1%; and prices for services increased by 2.7%, compared to 2.5% previously.
Italian Prime Minister Mario Draghi, former president of the European Central Bank, explained how the problem affects households.
“Inflation is rising because commodity prices are rising, especially food prices. These are the ones that affect a family’s purchasing power the most,” Draghi told foreign reporters on Thursday. “Shortages of certain raw materials are creating a bottleneck in production and forcing further price increases.” Draghi said that as long as inflation remains temporary, governments can respond with fiscal measures, such as payments to help low-income families with higher heating and electricity costs. But if it becomes a longer-term problem, the response will have to be structural, he said.