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Horror-Show Inflation in Euro Countries: Overall 10.7%, Germany 11.6%, Without Energy 6.9% & More Trending News


“Defeating inflation is our mantra, our mission, our mandate,” and that’s “why we have to raise interest rates”: ECB’s Lagarde now, after years of money-printing and NIRP.

By Wolf Richter for WOLF STREET.

The total inflation fee in the 19 international locations that use the euro jumped to 10.7% in October, up from 9.9% in September, by far the worst in the historical past of the Eurozone knowledge going again to 1997, pushed by vitality, meals, non-energy industrial items, and more and more companies, in accordance with Eurostat immediately. Compared with the prior month, inflation spiked by 1.5%; on an annualized foundation, that’s shut to twenty%!

In Germany, inflation spiked to 11.6%, primarily based on the harmonized technique utilized by Eurostat. Germany’s personal CPI measure, launched final week, jumped to 10.4%, the worst since 1951. In the three Baltic international locations, inflation remained above 20%.

Inflation started spiking final 12 months nicely earlier than Russia’s invasion of Ukraine. Early 2021 was when the inflation dam broke globally, with the pandemic money-printing and deficit-spending binge nonetheless in full swing. The dam simply broke, and inflation washed over the lands. In July 2021 in the Eurozone, inflation shot previous the ECB’s goal of two%. It hit 4.9% in November 2021, and 5.1% in January 2022 earlier than the battle in Ukraine had begun. Russia’s invasion of Ukraine made the prevailing developments worse:

The CPI with out vitality elements — so with out retail value adjustments for gasoline, diesel, electrical energy, pure fuel piped to the house, and different vitality elements in the basket of shopper items and companies — spiked to six.9% in the Eurozone. This measure started rising in the summer time final 12 months, hit 2% in October 2021, and three.1% in February 2022.

EU inflation 2022 10 31 Eurozone CPI without energy

The ECB’s personal horror present.

On Friday, to arrange for the general public airing of this horror present that inflation in the Eurozone has change into, Christine Lagarde, president of the ECB – the very entity that’s in cost of this horror present – got here out and mentioned in an interview on Irish broadcaster RTE that “defeating inflation is our mantra, our mission, our mandate.”

She then tweeted about that interview, repeated that phrase, and added: “We know that the current situation is tough for many people across the euro area – that is why we have to raise interest rates to tame inflation.”

This assertion is a hoot after she and her predecessor, Draghi, and everybody on the ECB, ought to have considered that years in the past, earlier than repressing rates of interest into the destructive, which is a complete absurdity, and printing practically €7 trillion over the previous seven years to load up the ECB’s stability sheet that now has €8.8 trillion in belongings.

But at the very least, the ECB has gotten began. Last week, it hiked its deposit fee by 75 foundation factors to 1.5%, having now hiked by 200 foundation factors in three conferences beginning in July, the quickest three-meeting fee enhance in its historical past, and it “expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target,” it mentioned. But this accretion fee of 1.5% remains to be sort of a hoot, with CPI inflation at 10.7%.

EU ECB deposit rate 2022 10 27

Inflation by Eurozone nation.

In Germany, inflation spiked to 11.6%, an unthinkably excessive fee for Germans. But already in November 2021, nicely earlier than Russia’s invasion of Ukraine, inflation hit 6.0% in Germany.

This was simply after Bundesbank President Jens Weidmann – whose central financial institution has been helplessly watching and politely lamenting the ECB’s shenanigans – turned in his resignation in October, to change into efficient on December 31. He’d had it.

EU inflation 2022 10 31 Germany CPI total

And but, inflation subsidies lowered the inflation numbers. Across Europe, governments have provide you with schemes, subsidies, tax cuts, and caps to cut back the chunk of this inflation, notably associated to gasoline, vitality extra broadly, and public transportation. Some of these subsidies have now expired, together with in Germany.

In the three Baltic international locations, there was a slight downtick in October, however CPI charges remained above 21% in all three.

Annual CPI enhance, October 2022

This chart exhibits the inflation fee of every of the 19 Eurozone member states:

EU inflation 2022 10 31 Eurozone countries CPI

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Horror-Show Inflation in Euro Countries: Overall 10.7%, Germany 11.6%, Without Energy 6.9%

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