Over 17% inflation in the Netherlands in September, compared to the previous year. Almost 11% in Germany, a country historically allergic to rising prices. In Belgium, 12%. Between 22% and 25% in the Baltic countries… The price rise statistics, published on Friday 30 September by Eurostat, brought their new batch of historical records. Never, since the creation of the single currency, has inflation been at such a high level.
For the euro zone as a whole, it reached the symbolic threshold of 10% in September (over one year) against 9.1% in August. The exception remains France, where the tariff shield limited the increase, making it possible to post the lowest level of the single currency countries, at 5.6%, down from August. The gas shock is the main explanation for this outbreak. Russia began the summer by claiming technical problems with the gas supply to Europe, before gradually tightening the screw, and finally completely cutting the Nord Stream 1 gas pipeline.
On the Dutch market, which serves as a benchmark in Europe, the price of gas was around 30 euros per megawatt hour in September 2021. After the start of the war in Ukraine, at the end of February, it quintupled, before stabilizing a little below 100 euros until the end of June. But, in July, it rose to 200 euros, then it peaked at 350 euros in August, before returning to around 200 euros. Never seen. In these circumstances, energy inflation in the euro zone in September (over one year) is 41%. But the phenomenon is spreading to all sectors. Food is particularly affected, prices having increased by 12% over one year.
A recession seems inevitable
Industry, a heavy consumer of energy, suffered the same phenomenon: the price of industrial goods increased by 5.6%. As for services, where the energy impact is normally more diluted, inflation has reached 4%. “This jump in inflation in the euro zone in September will be a serious concern for the European Central Bank [BCE] », underlines Jessica Hinds, of the firm Capital Economics. The ECB, whose mandate is to keep inflation at 2%, has started to raise its interest rate sharply, from −0.5% in June to 0.75% today. A further increase of 0.75 points at its next meeting, scheduled for October 27, now seems very likely.
“We then expect another increase of 0.75 points in December [la réunion suivante], then by 0.25 points in February [celle d’après] », predicts Nomura Bank. The ECB’s interest rate would then be 2.5%, the highest since 2008. This monetary tightening is taking place at a time when the European economy is already showing many signs of slowing down. Industrial production is down – the latest statistics, for July, showed a decline of 2.3%. The economic sentiment index, based on surveys carried out across the euro zone among households and businesses, fell sharply in September, to 93.7 points, against 97.3 points the previous month, 100 points being the long-term average.
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