By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News – March 2, 2022

The rate of annual inflation of the Eurozone hit 5.9% in February, after 5.8% in January, 5% in December4.9% in November, 4.1% in October, 3.4% in September and 3.0% in August 2021, according to a flash estimate issued by Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy annual inflation is expected to experience the highest annual rate in February (31.7%, compared to 28.8% in January), followed by food, alcohol & tobacco (4.1%, compared to 3.5% in January), industrial goods excluding energy (3.0%, compared to 2.1% in January) and services (2.5%, compared to 2.3% in January).

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 December, inflation in the euro zone had already broken a record, at 5.1%.

Lithuania (13.9%), Estonia (12.4%), Belgium (9.6%) and Latvia (8.9%) felt the highest rates of annual inflation in January 2022, exceeding the European average. Prices also rose in Germany (5.5%), in France (4.1%), Spain (7.5%) and Italy (6.2%), according to harmonized European data calculated by Eurostat.

This strong wave of inflation adds pressure on the quantitative easing and purchases assets program of the European central bank, accused of reducing the purchasing power of the euro currency.

Read also : How to invest in gold

Amid this high inflation in the Euro area and in the U.S., gold prices have been growing over the past month and gained 8.23%, to reach $1,940 per troy ounce. The yellow metal is a great hedge against inflation because it rises in price when the cost of living standards rises. Even state central banks have been purchasing physical gold since 2014 to strenghten their national paper currencies amid global economic and political disruptions. Inflation is not expected to significantly lower in 2022, because of persistent high public spending, state deficits, global industrial competition, quantitative easing policies and supply chains disruptions due to war in Europe.

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© Copyright 2022 – Swann Collins, investor and consultant in international affairs.