Inflation reaches 4.9% in euro zone, in November, and 6% in Germany, but the majority of economists continues to think that the phenomenon is temporary.
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“Inflation figures for November came out and it is hoped that this time it will really be the peak.” Frederik DuCrozet, strategist in the manager of Fortune Pictet, sums up the general feeling that dominated after The publication, Tuesday, November 30, the price index in euro zone: at + 4.9% in November, it is at its highest level for thirty years.
Month after month, economists and central bankers believe that the phenomenon is passenger. 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 for the moment relatively spared, with a price index up 3.4%. “Many elements indicate that inflation is less temporary than what we originally thought”, recognizes Eric Dor, the Director of Economic Studies at IEEEG, a business school.
Only one year ago, in November 2020, in the middle of the pandemic, the euro zone was in disinflation, with a decline price index of 0.3% over one year. In June, while vaccination campaigns allowed the reopening of the economies, it increased by 1.9%; Then 3.4% in September, 4.1% in October and today 4.9%. Knowing that the European Central Bank (ECB) officially targets 2% inflation, is it time to panic?
Violent correction
Certainly not, respond in chorus economists and the ECB, who emphasize that the phenomenon is – at least in part – temporary. They have some strong arguments for them. The main thing is that price shock comes above all from the flexibility of the cost of energy (+ 27% over one year in euro zone). The outbreak of oil and gas has been transformed without surprise risen the price of gasoline to the pump and electricity bills. Except energy, inflation in euro zone is 2.5%.
But the price of oil could have reached a peak. The discovery of the Omicron variant has created a violent correction in recent days, with a fall barrel of 20% since mid-October. “More than half of the price increase in France is linked to that of energy, it’s huge, Note Mathieu Plane, an economist at the French Observatory of Economic Consumption. The reversal of prices of raw materials and oil could mean that we will reach inflation peak a little faster than expected. “
Other statistical phenomena explain the severity of inflation. Germany had dropped its VAT from 19% to 16% at the beginning of the pandemic, before submitting it to its previous level in January 2021. On its own, the phenomenon counts for an inflation point in Germany, calculates Yannick Kalantzis , from the Banque de France: “Mechanically, this effect will disappear at the January 2022″, he specifies.
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