growth in the third quarter was only 0.2 %, while inflation in October reached 10.7 %.
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The European economy is stalling. After an increase in gross domestic product (GDP) in the euro zone of 0.6 % in the first quarter, and from 0.8 % in the second quarter, growth reduced to 0.2 % in the third quarter, according to data Published by Eurostat, Monday October 31. This brake stroke is logically the consequence of the inflation of inflation, which reduces the purchasing power of households and which shows no signs of slowdown. In October, the rise in prices within the countries of the single currency reached a new record, at 10.7 % compared to the previous year. It is the first time in the history of the euro that inflation reaches a two -digit number.
Now, eleven of the nineteen member countries of the euro have an inflation which exceeds 10 %, three of which (the Baltic countries) above 20 %. Germany is 11.6 %, Belgium at 13.1 %, Italy at 12.8 %, while the Netherlands bind 17 %. France continues to have the most limited inflation of all, thanks to the price shield, but it also increases, now at 7.1 % (Eurostat data is slightly different from those of INSEE, but allow comparisons between countries).
This price shock is the most violent that the old continent has known for four decades. “A recession is inevitable,” said Paolo Grignani, from Oxford Economics. He stresses that the deterioration of the economy has accelerated as the third quarter advanced. While the tourist season was excellent this summer, supporting the activity, most indicators are now at half mast. “The question will be to know the extent of the recession,” continues Mr. Grignani.
Shake the phenomenon
The gas shock this summer will have marked a turning point. The gradual closure of gas pipelines by Russian President Vladimir Putin – while the gas is not affected by the sanctions – has caused an outbreak of unprecedented prices, the impact of which is currently reflected through all sectors. According to Eurostat, energy prices increased by 41.9 % in October (over one year). Food prices also experience a strong push, up 13.1 %, which particularly affects the poorest households. But even so-called underlying inflation (excluding food and energy) continues its inexorable increase, proof that the phenomenon spreads throughout the economy: it was 5 % in October, up 0.6 % over a month .
To try to stop the phenomenon, the European Central Bank began in July a cycle of increase in its interest rates. In total, it has now increased its rate by 2 points, to 1.5 % for the deposit rate (and 2 % for the refinancing rate). Thursday, October 27, during her last meeting, Christine Lagarde, its president, announced that she was going to continue the movement, with at least one increase in the interest rate in December.
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