By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, April 29, 2022

The euro zone’s annual inflation rate is estimated at 7.5% in April 2022, compared to 7.4% in March and 5.9% in February, according to an estimate published by Eurostat, the statistical office of the European Union.

As for the main components of euro area inflation, energy is expected to experience the highest annual rate in April (38.0%, compared to 44.4% in March), followed by food, alcohol & tobacco (6.4%, compared to 5.0% in March), industrial goods excluding energy (3.8%, compared to 3.4% in March) and services (3.3%, compared to 2.7% in March).

Estonia (19%), Lithuania (16.6%), Latvia (13.2%) and Slovakia (10.9%) felt the highest rates of annual inflation in April 2022, exceeding the European average. Prices also strongly rose in Germany (7.8%), in France (5.4%), Spain (8.3%) and Italy (6.6%), according to harmonized European data calculated by Eurostat.

Eurozone inflation hit 7.4% in March, 5.9% in February, 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 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. In addition, the monetary policy of the ECB has failed to support a strong economic growth.

Indeed, during the first quarter of 2022, seasonally adjusted GDP increased by 0.2% in the euro area and by 0.4% in the EU, compared to the previous quarter, according to data published by Eurostat on April 29. During the fourth quarter of 2021, GDP had increased by 0.3% in the euro area and 0.5% in the EU.

Quantitative easing policies (massive printing of paper money) and low interest rates maintained by the European Central Brank since 2010 (with only few breaks), now associated with supply chain disruptions after coronavirus lockdowns worldwide and Western sanctions against Russian banks, companies and commodities (US ban on Russian crude oil, US and EU ban on Russian state-owned companies trading commodities such as oil, gas, rare earth metals, palladium, gold).

The situation is also critical in the United States, where annual inflation hit record 7.9% in February and 8.5% in March. This is the highest level of inflation never seen in the United States since February 1982 and the dynamic has been here for months. U.S. inflation already reached 7.5% in January after hitting 7% in December 2021, 6.8% in November and 6.2% in October.

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 reached yesterday a high of $1,921.40 per troy ounce, before stabilizing at $1,897.70 per troy ounce at closure on April 30, 2022 04:59 PM NY Time.

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 Ukraine.

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