By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News – February 2, 2022
The rate of annual inflation of the euro zone hit record 5.1% in January 2022, after 5% in December, 4.9% in November, 4.1% in October, 3.4% in September and 3.0% in August, according to a flash estimate issued by Eurostat, the statistical office of the European Union. Many hoped that annual inflation would ease in January. They were wrong.
Never has the statistical office of the European Union recorded such a figure since the start of its estimates, in January 1997, for the 19 countries that have adopted the single currency. In November, inflation in the euro zone had already broken a record, at 4.9%. Working middle classes are the first who suffer from this high inflation, mainly caused by quantitative easing policies from the European Central Bank since the 2010’s and supply chain disruptions worldwide.
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Being the main component of inflation in the euro area, energy is expected to experience the highest annual rate in January (28.6%, compared to 25.9% in December), followed by food, alcohol & tobacco (3.6%, compared to 3.2% in December), services (2.4%, stable compared to December) and industrial goods excluding energy (2.3%, compared to 2.9% in December).
On the other hand, the rate of rise in underlying inflation, excluding energy and food, slowed down slightly to 2.5% against 2.7% in December. This indicator is particularly scrutinized by the ECB, as it is less volatile.
While inflation remains more than twice the target set by the European Central Bank (ECB), the latter estimates that the rise in prices is fueled mainly by transitory factors and that inflation will return below 2% from 2023.
The Governing Council of the ECB meets on Thursday February 3rd and should, barring major surprises, keep monetary policy unchanged. However, the ECB could
Countries of the euro zone with the highest annual inflation in January 2022 are Lithuania (12.2%), Estonia (11.7%), Belgium (8.5%), Slovakia (8.5%), Latvia (7.7%), Netherlands (7.6%), Spain (6.1%) and Greece (5.5%). Following these news of record inflation in the euro area, gold prices are up 0.40% on February 2nd, reaching $ 1,808 per troy ounce, after $ 1,798 per troy ounce on January 31.
America also faces hight inflation. The U.S. inflation surged to 7% over 2021, a record since June 1982, after hitting 6.8% in November.
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© Copyright 2022 – Swann Collins, investor and consultant in international affairs.