European inflation soars to a record 7.5% on fuel and food costs
LONDON (AP) — Inflation in Europe hit a new high, according to new EU figures released Friday, in a new sign that rising energy prices fueled by Russia’s war in Ukraine are pressing consumers and increases pressure on the central bank to raise interest rates.
Consumer prices in the 19 countries that use the euro rose at an annual rate of 7.5% in March, according to the European Union’s statistics agency, Eurostat.
The latest reading broke the high last month, when it hit 5.9%. It is the fifth month in a row that inflation in the euro zone has set a record, taking it to the highest level since record keeping for the euro began in 1997.
Rising consumer prices are a growing problem around the world, making it harder for people to pay for everything from groceries to their utility bills. Soaring energy prices are the main driver of inflation in Europe, with prices jumping 44.7% last month from 32% in February, according to Eurostat.
Oil and gas prices had already risen due to growing demand from economies recovering from the depths of the COVID-19 pandemic. They surged after Russia, a major oil and gas producer, invaded Ukraine over fears that sanctions and export restrictions could jeopardize supplies.
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It is also becoming more expensive to eat in Europe. Food costs, including alcohol and tobacco, rose 5% from 4.2% the previous month.
Mina Agib, who runs an Egyptian restaurant called Meya Meya in Berlin, said the prices of cooking oil and meat had recently risen by 70-100%.
“Who is not concerned?” Agib responded when asked if he felt the impact of the price hike.
Two weeks ago, one of its suppliers said meat prices would rise by 70 euro cents (77 cents) per kilogram, Agib said. “They told us to expect another raise next week.”
To avoid losing money, Agib had to increase the price of some dishes. A customer, unhappy at having to pay half a euro more for a plate of sliced meat, dips and salad, has posted a negative review online – the first since his restaurant opened more than a year ago. year.
“We are between a rock and a hard place,” he said. “We want to satisfy customers with high quality ingredients and homemade dishes. But we also have to pay the prices demanded by our suppliers.
At an outdoor market this week in Cologne, Germany, buyer Andreas Langheim also lamented how life was getting more expensive.
“I can see the effect of the price increase, especially here at the market,” Langheim, 62, said as he picked up bread from a bakery van. “Everything is more expensive now.”
Prices also rose for goods like clothes, appliances, cars, computers and books, up 3.4% from the 3.1% set the previous month, and for services, which rose 2.7% from 2.5%.
The latest figures make it more urgent for the European Central Bank to step down and act, analysts said. The bank is balancing record inflation with the threat that war could harm a strained economy. Last month, it accelerated its exit from economic stimulus efforts to fight inflation, but did not take more drastic measures.
“We believe the ECB will soon conclude that it cannot wait any longer before starting to raise interest rates,” said Jack Allen-Reynolds, senior European economist at Capital Economics, in a report.
Other central banks have started raising rates, including in the United States, where inflation hit a 40-year high of 7.9%. European countries that do not use the euro, including Britain, Norway and the Czech Republic, have done the same.
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Italian Prime Minister Mario Draghi, former president of the European Central Bank, explained how the problem affects households.
“Inflation is rising because commodity prices are rising, especially food prices. These are the ones that affect a family’s purchasing power the most,” Draghi told foreign reporters on Thursday. “Shortages of certain raw materials are creating a bottleneck in production and forcing further price increases.”
Draghi said that as long as inflation remains temporary, governments can respond with fiscal measures, such as payments to help low-income families with higher heating and electricity costs. But if it becomes a longer-term problem, the response will have to be structural, he said.
The Italian construction industry has sounded the alarm over how jobs on thousands of public and private construction sites are at risk from inflation. He warned that the sector could not only slow down but come to a complete halt due to soaring costs for fuel and raw materials, including iron, reinforced concrete and steel, the price of which has doubled.
Associated Press reporters Frank Jordans in Berlin, Daniel Niemann in Cologne, Germany, Frances D’Emilio in Rome and Colleen Barry in Milan contributed to this report.