Eurozone: Inflation reached a record high in July
According to Eurostat, growth in the second quarter was stronger than expected despite price increases.
Even in midsummer, the entire European continent is confronted with rising prices. The latest Eurostat data released on Friday shows that euro-zone annual inflation hit a record 8.9% in July, up from June.
In detail, price increases are unsurprisingly particularly strong in the energy sector, reaching 39.7% over a year in July. A high level, but slightly below the previous month. Conversely, between June and July, inflation accelerated for food – 9.8% up from 8.9% in the previous month -, industrial goods – 4.5% from 4.3% – and services – 3.7% from 3.4% -, lists the attached statistical service to the European Commission.
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There are very large differences between the member countries of the eurozone. Among the countries examined, France is one of the countries with the lowest price increases, behind Malta. Conversely, bills are rising the most in the three Baltic countries with inflation rates above 20%. In terms of dynamics, there are also strong differences here: in July, price increases slowed down in five countries, including Belgium and Italy, while they accelerated sharply in Latvia, the Netherlands, Cyprus and Estonia.
On the same Friday, INSEE reported a particularly high inflation rate for France. This month’s surge is driven by “an acceleration in the prices of services related to summertime, food and, to a lesser extent, finished goods“, specified the national statisticians.
Growth stronger than expected
Eurostat also returned to growth in the euro zone and the European Union on Friday. As noted by INSEE for France, activity in the second quarter held up much better than expected: GDP grew by 0.7% in the 19 countries sharing the common currency compared to the previous quarter, after 0.5% in the first three months of the year. And this, while inflation, the war in Ukraine and the recovery of the epidemic, on the contrary, raised fears of an economic slowdown.
Here, too, the results of the countries make the big difference: GDP fell in Latvia and Portugal, while it stagnated in Germany and improved only slightly in Belgium and the Czech Republic. In contrast, growth in Sweden, Spain and Italy is solid. France, for its part, reports growth of 0.5%, a figure that corresponds to that published by INSEE on the same day. Despite the ever-increasing headwind, the Old Continent is resisting. It remains to be seen whether the tourist summer, which promises record highs, will continue this good momentum.
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