“The inflation figures for November are out and we hope that this time around it will really be the peak. “ Frederik Ducrozet, strategist at asset manager Pictet, sums up the general feeling that dominated after the publication, Tuesday, November 30, of the price index in the euro zone: at + 4.9% in November, it is at its highest high level for thirty years.
Month after month, economists and central bankers believe the phenomenon is temporary. Month after month, they are denied. Some countries are particularly affected: 6% in Germany; 7.1% in Belgium; 8.4% in Estonia and 9.3% in Lithuania… France remains relatively spared for the moment, with a price index up by 3.4%. “Many elements indicate that inflation is less temporary than what was initially thought”, recognizes Eric Dor, the director of economic studies at Ieseg, a business school.
Only a year ago, in November 2020, in the midst of a pandemic, the euro zone was in disinflation, with a price index down 0.3% over one year. In June, while the vaccination campaigns allowed the reopening of economies, it rose to 1.9%; then 3.4% in September, 4.1% in October and today 4.9%. Knowing that the European Central Bank (ECB) is officially targeting 2% inflation, is it time to panic?
Violent correction
Certainly not, answer in chorus the economists and the ECB, who stress that the phenomenon is – at least in part – temporary. They have some solid arguments for them. The main thing is that the price shock comes above all from the surge in the cost of energy (+ 27% over one year in the euro zone). The surge in oil and gas unsurprisingly turned into higher gasoline prices at the pump and higher electricity bills. Excluding energy, inflation in the euro zone is 2.5%.
However, the price of oil may have peaked. The discovery of the Omicron variant has created a violent correction in recent days, with a barrel dropping 20% since mid-October. “More than half of the price increase in France is linked to that of energy, it’s huge, notes Mathieu Plane, economist at the French Observatory of Economic Conjunctures. The turnaround in commodity and oil prices could mean that peak inflation will be reached a little faster than expected. “
Other statistical phenomena explain the severity of inflation. Germany had lowered its VAT from 19% to 16% at the start of the pandemic, before returning it to its previous level in January 2021. By itself, the phenomenon counts for one point of inflation in Germany, calculates Yannick Kalantzis , from the Banque de France: “Mechanically, this effect will disappear at 1er January 2022 », he specifies.
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