The price increase in euro zone reached 8.5 % in February. It continues to expand in all sectors of the economy. Interest rates should continue to increase.
by Eric Albert (London, Correspondence)
Europe has not finished with inflation. The price increase reached 8.5 % in February (over twelve months), according to data published by Eurostat, Thursday March 2. It is very slightly lower than 8.6 % of January, and in a sharper decrease compared to the peak of October (10.1 %). But the decline remains slow.
In several major European countries, inflation is even increasing. This is the case of France (from 7 % in January to 7.2 % in February), Germany (from 9.2 % to 9.3 %) or Spain (5.9 % at 6.1 %). By the way, hexagon, long the least affected country of the old continent thanks to the energy shield, is now almost in the European average. Conversely, a slight decrease has been calculated in Italy, Austria or Belgium.
Only good news: the energy shock is gradually resolving. Winter has indeed passed better than expected, without shortage of gas or rationing, and prices returned to their levels before the war. Today, energy inflation in the euro zone is close to 14 %, against around 40 % at the start of fall 2022.
inflationary spiral
But, for the rest, the pressure on prices continues to extend to all sectors. Food, which weighs particularly on the most precarious households, has experienced an inflation of 15 %, an absolute record since the creation of the euro zone. Likewise, so-called “underlying” inflation, that is to say excluding food, energy, tobacco and alcohol, which are more volatile elements, continues its increase, now at 5.6 %, against 5, 3 % in January. This index is monitored very closely by economists, because it serves as a guide for the persistence of inflation. Another worrying sign, the price increase in the service sector reached 4.8 %, against 4.4 % in January.
This transmission of inflation to the whole economy is obviously not a surprise. Gradually, companies have increased energy costs to their customers. Statistics confirm this trend: at the start of the war, the shock was concentrated on energy prices; He then transmitted to food, especially because of the sharp increase in the cost of fertilizers; Then he went to consumer goods; He now reaches the services.
The problem is that the more this reality is felt, the more employees are pushed to request increases in remuneration to compensate for the loss of their purchasing power, and the more the risk of an inflationary spiral is getting closer.
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