Inflation is gradually being contained in the euro zone and in July it was for the first time below the levels prior to the outbreak of the war in Ukraine, in February 2022. This is only half good news because at that time prices had already begun to rise and because current levels are far from the European Central Bank’s objective of placing inflation at around 2%.
According to estimates advanced today by Eurostat, prices accumulate a year-on-year rise in the euro area of ??5.3% in July, two tenths less than a month earlier and already well below the 10.6% registered in October last year. in full escalation of energy prices.
His estimate is that prices have closed July with a year-on-year rise of 2.1% in Spain, two tenths less than the percentage recently published by the INE as it is harmonized to compare with the rest of the countries. In any case, it follows the tail of the EU in price increases, only surpassed by Luxembourg and Belgium, with rates of 2% and 1.6%, respectively.
In the least virtuous part of the classification is Slovakia, where prices continue to rise in double digits, 10.2%. In Germany, the year-on-year increase is now 6.5%, among the highest in Europe, although already far from the rates of over 11% registered more than a year ago.
“Energy prices were once again the main driver of the decline, down 6.1% in July. There are also signs of a slight decline in food prices, but less than expected. At 10, 8%, the increase is still too strong and puts a strain on household budgets,” says Ulrike Kastens of DWS, analyzing data released today by Eurostat.
Spain maintains a gap in the evolution of prices with respect to Germany close to four points. Inflation was higher in Spain in the months after the pandemic emerged, but it turned around in the summer of last year, at a time when the entire continent was struggling to fill its gas reserves and was looking with concern at the cost of energy. The good Spanish gas infrastructures first and the Iberian exception later helped to cushion the rise in the cost of hydrocarbons and electricity.
The ECB is closely watching these data with a view to possible increases in additional interest rates to the 4.25% reached last week. Its president, Christine Lagarde, indicated in the last press conference that from now on all economic parameters will be relevant to determine the next steps.
Eurostat has also compiled today the still incomplete data on growth in the second quarter, in the absence of countries like Italy that can alter the final result. The European Union stagnated in the quarter, compared to 0.2% growth at the beginning of the year and a decline of one tenth at the end of 2022, while the euro zone grew 0.3%.
Germany is once again the element of concern and the one that drags the region into stagflation: growth stagnates and prices do not stop rising. For the BBVA economists, stagflation is still an “exceptional” episode typical of moments in which energy and raw materials rise for exogenous reasons.
GDP was flat in Germany in the second quarter, after falling 0.1% in the first and 0.4% in the fourth of 2022. Technically, the country is pulling its head out of recession, but not quite there. to grow.
Ireland, with 3.3% growth compared to the previous quarter, is the country that stands out, while in France the increase has been 0.5%, compared to 0.4% in Spain.