(ANSA) - ROME, JUL 5 - Inflation in Europe is easing slightly but banking authorities such as the European Central Bank and the European Banking Authority remain cautious. Consumers across the continent need to fork out more money for services and goods.
- Eurozone inflation at 2.5% in June, down from 2.6% in May
- European Central Bank dampens hope for further lowering of interest rates
- Food and services tend to get more expensive for consumers.
Inflation accelerated rapidly after Russia launched its full-scale invasion of Ukraine in early 2022. Energy prices in particular shot upwards, which also impacted the cost of industrially produced goods and imports. The inflation rate peaked at more than 10% in 2022.
In June, the European Central Bank (ECB), which is tasked with maintaining price stability, lowered its key interest rates by 0.25 percentage points for the first time since the wave of inflation hit the currency area.
If inflation falls in the Eurozone as a whole, it would give the ECB leeway to cut key interest rates further over the course of the year. The ECB considers the 2% inflation mark a key target.
ECB President Christine Lagarde sought to dampen expectations of further interest rate cuts. "It will take time for us to gather sufficient data to be certain that the risks of above target inflation have passed," she said during an ECB conference in Portugal earlier this week.
The call for caution also comes from the European Banking Authority, which warns credit institutions given the "high uncertainty" about economic growth, interest rates and geopolitical risks.
Eurostat: Inflation eases year on year in the Eurozone.
On July 2, the European statistics office Eurostat published its monthly provisional data estimate showing the inflation rate in the Eurozone standing at 2.5% year-on-year in June (June 2023: 5.5%).
The Eurozone is made up of 20 of the 27 EU member states using the Euro currency. Bulgaria, Czechia, Hungary, Poland, Romania and Sweden are currently non-members.
Eurostat's latest data estimates place Belgium (5.5%), Spain (3.5%), Croatia and the Netherlands (both 3.4%) as those with the highest "All Harmonised Index of Consumer Prices (HICP)" percentages in June while Finland (0.6%), Italy (0.9%) and Lithuania (1.0%) registered lowest percentages.
The HICP, the Harmonised Indices of Consumer Prices, aids with international comparisons of consumer price inflation and includes energy, food, alcohol and tobacco, services and non-energy industrial goods. In short: It gives a comparable overview of how much goods and services purchased by Euro households cost over time.
Looking across the Eurozone.
France: In France, where the second round of early legislative elections will be held on July 7, energy prices play a role in campaigning as gas and electricity have largely contributed to fueling inflation and weighing on the French budget in recent years.
Preliminary data by the National Institute of Statistics and Economic Studies (Insee) suggests that over a year, the Consumer Price Index should rise by 2.1% in June 2024, after +2.3% in May.
The slowdown in food and energy prices over the year could explain this slight ease of inflation. Prices of services, manufactured products and tobacco are expected to rise year on year.
Over one month, consumer prices should remain almost stable in June 2024: prices for services are expected to increase while energy and food prices are expected to fall.
Germany: Preliminary June inflation figures by Germany's Federal Statistical Office released on Monday showed inflation easing again. The Consumer Price Index stood at 2.2% in June 2024 (June 2023: 6.4%), a slight decline from May (2.4%).
Core inflation, which excludes volatile prices for food and energy, amounted to 2.9%. While services in particular became more expensive, energy became cheaper in June.
Italy: Households' purchasing power has risen by 3.3% in the first quarter of 2024 compared to the previous one as inflation has come down according to ISTAT, the Italian National Statistical Institute. However, greater spending power does not always translate into more purchases: Gross disposable income rose by 3.5% while consumer spending only grew by 0.5%.
Based on ISTAT's preliminary estimates for June, the HICP increases by 0.2% on a monthly basis and by 0.9% on an annual basis (from +0.8% in the previous month).
Spain: According to the National Institute of Statistics (INE), the Consumer Price Index stood at 3.4% in June showing a slight decrease in the year-on-year comparison to June 2023 (3.6%). The INE attributed this evolution to lower fuel prices and - while food prices increased - they did so to a lesser extent than in the same month of 2023. However, "entertainment and culture" offers have become more expensive in June compared to the same month in the previous year.
Slovenia: In Slovenia, inflation started to deviate markedly from the 2% target level in autumn 2021, even before Russia invaded Ukraine.
Consumer prices rose by 19% from October 2021 to June 2024, according to data from the national Statistical Office. The annual inflation rate peaked at 11% in the summer of 2022. Over the past year, inflation has been slowly moderating, reaching a three-year low in June this year at 1.5%.
The second half of 2023 in particular saw a substantial rise in prices of services but despite that, official data show that the standard of living per average Slovenian has not deteriorated in real terms, partly because of significant wage raises.
Croatia: In recent years, inflation in Croatia has been slightly higher than the average of the Eurozone, which Croatia joined on January 1, 2023, but lower than in EU countries outside the Eurozone.
According to the estimates of the National Bureau of Statistics, the prices of goods and services for personal consumption, measured by the consumer price index, according to the first estimate in June 2024 compared to June 2023, are on average 2.4% higher. Compared to May, they remained the same.
Generally speaking, food prices in Croatia have risen in recent years and have come close to prices in Western European countries. Rental prices have skyrocketed thanks to the country's tourism boom, economic growth.
Looking outside the Eurozone: Sweden, Romania, Bulgaria.
In Sweden, the government is cautiously claiming victory in the fight against inflation while worrying about the labour market as well as the food industry.
"It has been a tough winter, and even if the sun is shining now it's still not summer in the Swedish economy. We still have a lot of challenges. The unemployment is way too high," said finance minister Elisabeth Svantesson at a press conference last week, adding that competition in the food sector was "too weak" which leads to "higher prices for consumers".
Sweden currently has the third highest unemployment in the EU, after Spain and Greece.
Romania: The National Institute of Statistics' (INS) June data shows the inflation rate in Romania at 5.1% in May, down from 5.9% in April. Prices for food, non-food and services increased.
Postal services, drugs and detergents saw the largest increases in prices in May 2024, by approximately 25%, compared with the same month last year.
According to Eurostat, Romania was the country with the highest inflation in the EU in the first four months of the year.
Bulgaria: The main topic of discussion related to Bulgaria's inflation rate is the country's potential accession to the Eurozone. On June 26, the European Commission said that Bulgaria does not meet the price stability criterion for adopting the Euro, according to the European Central Bank's Convergence Reports.
On June 18, Eurostat said that year-to-year inflation in Bulgaria, measured against the harmonised index of consumer prices (HICP), accelerated to 2.7% in May, while in April it was 2.5%. Annual inflation in Bulgaria was equal to or lower than the annual inflation in the EU back in August of 2021.
EU accession candidates: Albania, North Macedonia, Bosnia and Herzegovina, Serbia.
Albania: In Albania, the increase in prices has slowed down, allowing breathing space for consumers, after the large increase experienced two years ago. Core inflation continues to decline and is currently at a three-year low.
In May, core inflation dropped to 2.3%, from 3.2% at the end of last year and 5.4% in the same period a year ago. The increase in core inflation is the lowest since October 2021.
Bosnia and Herzegovina: The annual inflation rate in Bosnia and Herzegovina remained stable at 2% in April, according to the latest data from the Agency for Statistics of Bosnia and Herzegovina. However, the Central Bank of Bosnia and Herzegovina predicts that overall inflation will increase to 2.9% in the third quarter.
The economy of Bosnia and Herzegovina is small and heavily dependent on the European Union, its largest trading partner.
Therefore, economic trends within the Union are closely monitored. Economic experts see high product prices as a result of excessive dependence on food imports.
North Macedonia: North Macedonia's annual inflation rate stood at 4.5% in May 2024, the highest since September 2023, up from 4% in April.
The increase is mainly driven by accelerated prices for transportation, housing and utilities and restaurants and hotels. In contrast, prices eased for food and non-alcoholic beverages, alcoholic beverages and tobacco as well as clothing and footwear. On a monthly basis, consumer prices increased by 0.9% in May, after a 0.7% increase in the previous month.
Serbia: The National Bank of Serbia (NBS) announced that according to the data of the Republic Institute of Statistics, year-on-year inflation slowed down to 4.5% in May, which, in accordance with the projections of the central bank, returned to the limits of the target deviation. According to the current projection, the NBS expects the inflation to continue to slow down until the end of the year.
(The content is based on news by agencies participating in the enr, in this case AFP, AGERPRES, ANSA, ATA, BTA, dpa, EFE, Europa Press, FENA, HINA, MIA, STA, Tanjug, TT). (ANSA).