By European News Correspondent Stephen Bailey.
Inflation is currently a worldwide phenomenon, with Europe and the US suffering considerably worse than the UK.
Several E.U. member states have reported strongly rising inflation recently. Inflation in the 19 countries that use the Euro reached its highest level on record, led by surging food and energy costs. Many other countries around the world have as well. The United States, for example, has also experienced this trend.
Data supplied by statistic agencies from the member states and Eurostat, the E.U.’s own statistic body, showed Eurozone inflation rose to a record high last month, indicating more pressure on the European Central Bank to raise interest rates for all the bloc’s member states this year.
This inflationary trend is illustrated by the example of the following member states.
The German economy, currently the biggest in Europe, has plummeted precipitously with inflation at its highest level for 18 years, with the ‘worst yet to come’ according to leading economists.
The inflation rate shot up to 5.2% there in November last year – a figure not seen since the early 1990s and is currently at 5.2%. Leading German economists predict that the rate will climb ever higher with extremely serious knock on effects for consumers, business, and the German economy in general.
René Schumann, Managing Director of the Düsseldorf Negotiation Advisory Group, cautioned:
‘The big wave of price increases for consumers is yet to come.’
Spain’s annual inflation jumped to 6.7% at end of 2021, the highest since 1989.
Spanish consumer prices in December of that year rose 6.7% from the same month the previous year, the fastest annual rise of inflation since 1989, flash data from the National Statistics Institute (I.N.E.) showed last week.
Prices increased 1.3% in December from November last year, compared with a 0.2% rise in December 2020, I.N.E. also revealed.
I.N.E. also found that electricity fees drove the annual price index to a 32 – year high, adding that prices for food also rose significantly in 2021, after a general decline the previous year.
Greece’s annual inflation rate jumped to 4.8% in November 2021 from 3.4% in October and after a -2.1% reading in November 2020, the Hellenic Statistical Authority said on Friday. The European Statistics Authority Eurostat had predicted on November 30th 2020 that Greece’s annual inflation was expected to rise to 4.3% in November of 2021.
The annual inflation rate in Italy accelerated to 3.9% in December 2021 from 3.7% in the previous month, in line with market forecasts. It was the highest reading since August 2008.
Inflation has risen around the World, but the U.S. has seen one of the biggest increases. The annual inflation rate there accelerated to 6.8% in November 2021, the highest since June 1982, and in line with forecasts. It marked the 9th consecutive month the inflation rate stayed above the Fed’s 2% target as global commodities rally, rising demand, wage pressures, supply chain disruptions and a low base effect from last year continue to push prices up.
Upward pressure was broad-based, with energy costs recording the biggest gain (33.3% vs 30% in October), namely fuel (58.1% vs 49.6%). Inflation also increased for housing (3.8% vs 3.5%); food (6.1% vs 5.3%, the highest since October 2008), namely food at home (6.4% vs 5.4%); new vehicles (11.1% vs 9.8%); used cars and trucks (31.4% vs 26.4%); clothing (5% vs 4.3%); and medical care services (2.1% vs 1.7%).
On the other hand, the inflation slowed for transportation services (3.9% vs 4.5%). Excluding food and energy, inflation went up to 4.9% from 4.6%, the highest since June 1991. (Source: U.S. Bureau of Labor Statistics.)
To complete the picture, several other countries around the World have also experienced a pronounced upward trend in inflation rates, including (in order of highest to lowest increase):
Brazil, Turkey, New Zealand, Estonia, Lithuania, Poland, Russia, South Korea, Mexico, Chile, Saudi Arabia, Ireland, Canada, Hungry, Norway, Austria, Israel, Portugal, Denmark, Belgium, Australia, the Czech Republic, Finland, Iceland, Slovakia, Latvia, Luxembourg, South Africa, Switzerland, Columbia, Sweden, Slovenia.
There are a number of factors behind the recent surge in inflation, but major causes are a perfect storm of supply chain disruption from Covid, government spending to fill the economic void and a synchronised global recovery driven by vaccine rollout and economies re-opening.