The inflationary hydra seems out of control. ” It should reach 10% before the end of the year. in the euro zone, prophesies Jack Allen-Reynolds, senior economist Europe at Capital Economics, a few minutes after the publication of consumer prices. In August, the rise accelerated further to reach 9.1% over one year, a new historic high, according to the first estimate published by Eurostat. It was 8.9% in July. ” As for the main components of inflation in the euro area, energy is expected to experience the highest annual rate in August (38.3%, compared to 39.6% in July), followed by food, alcohol & tobacco (10.6%, compared to 9.8% in July), industrial goods excluding energy (5.0%, compared to 4.5% in July) and services (3.8%, compared to 3.7% in July) », Details the European statistics agency.
” The most worrying sign for the European Central Bank is that the core inflation rate has risen to a new record high of 4.3% “, against 4.1% expected, judge Jack Allen-Reynolds. Although business surveys indicate that supply chain issues have eased, core goods inflation accelerated from 4.5% to 5%. »
The ECB could hit hard next week
Not all countries are in the same boat, depending on their energy mix and the aid provided by governments. Thus, in France, inflation is estimated at 6.5% in August – 5.8% by INSEE -, when it reached 8.8% in Germany and jumped to more than 20% in the Baltic countries. Eurostat figures the rise in consumer prices at 20.8% in Latvia, 21.1% in Lithuania and 25.2% in Estonia.
These figures support the idea that interest rates will continue to rise in the euro zone. It remains to be seen whether the President of the ECB, Christine Lagarde, will pull out the heavy artillery, by increasing the interest rate by 75 basis points from September 8, or whether she will opt for a more moderate increase of 50 basis points. base. ” With policy rates well below appropriate levels […] a 75 basis point hike looks increasingly likely concludes Jack Allen-Reynolds.
PC