En Europe, loin d’avoir atteint son pic, l’inflation s’installe durablement

Alors que l

Is this the end of runaway inflation that has plagued the United States for nearly a year? The latest figures seem to suggest so. In July, for the first time in several months, the country registered a slowdown in inflation, which went from 9.1% to 8.5% the previous month. An encouraging sign that still seems a long way off in Europe, where the consumer price index in the euro zone peaked last month with a one-year rise of 8.9%, up from 8.6% in June. Following the European trend, France saw its inflation pick up again in July, reaching 6.1% annually from 5.8% in June. We are at the peak of inflation. », the government spokesman, Olivier Véran, assured on July 28, adding that he would will start to decline in 2023”.

gas addiction

Can we really expect a spike in the coming months, as appears to be the case in the US? Nothing is less secure, for several reasons. Starting with the factors that feed this inflation. If the United States is experiencing a slowdown in price rises, it is mainly thanks to energy prices, in particular the roughly 20% drop in gasoline prices. The latter have soared since Russia’s invasion of Ukraine on February 24, reaching peaks. But recently, the price of oil seems to have dropped again. On the contrary, the prices of consumer goods, such as food, but also services, continue to rise, comments economist Eric Dor, director of studies at theIÉSEG School of Management. However, given that fuels have a significant weight in spending, the reduction in their prices is enough to reduce average inflation even though the rest of the spending items continue to grow. ». Therefore, we must be careful before drawing conclusions in the face of what could only be a fictitious fall in inflation. », he concludes. On the contrary, Europe, which has adopted an embargo on Russian oil although accompanied by some exemptions, suffers above all from the rise in gas prices, on which it depends much more than the United States. Due to the war in Ukraine, hydrocarbon prices continue to reach new highs. Again on Thursday, the Dutch TTF, the benchmark for natural gas in Europe, closed at 241.00 euros per megawatt hour (MWh), a historic close, and continued to rise on Friday. ” In fact, Europe could suffer greatly from variations in the price of gas compared to the United States, which is autonomous in terms of energy.says Eric Dor.

How the war in Ukraine is shaping a new geopolitics of energy

The inflation contained by the public powers

However, this rise in the price of gas is not fully reflected in the household bill of certain Europeans, such as in France, which is increasing measures to support purchasing power. In force since September 30, 2021, the price shield makes it possible to contain gas inflation. Likewise, a bonus has been introduced at the pump to reduce the price of each liter of fuel by 18 cents. In Germany, the government has decided to temporarily lower VAT on gas, from 19% to 7%. In several European countries, the acceleration of inflation is limited by the various interventions of public authorities. Therefore, it is difficult to compare its evolution with that of the United States because this creates a gap. And, the announcement of German Chancellor Olaf Scholz, there is little, regarding the reduction of VAT on gas, shows that these States have not yet finished with this strategy. The question is then to know how long these measures will be maintained, which prevent the price shock from spreading to the consumer. »asks Denis Ferrand, CEO of Rexcode.

Towards sustainable inflation

Especially since, even if inflation were to ease, thanks in particular to an improvement in the geopolitical situation, it is unlikely to return to its 2020 level. It will be lower when the external factor that is the rise in energy prices has weakened, but it will not fall back to 2%. »the objective set by the European Central Bank (ECB), predicts Denis Ferrand, who expects it to stabilize around 5%. Inflation, which until now had been temporary in nature, caused by the strong recovery of the economy after the health crisis and accentuated by the war in Ukraine, could become more fundamental, in particular if there is an indexation of wages to prices .», he explains. In the United States, where companies face significant labor shortages, the median hourly wage in the private sector thus rose 5.7% in February over the past 12 months.

Slight pause in the European economy in the second quarter, inflation continues to darken the horizon

The risk of pressure on prices will persist »Eric Dor abounds, who advances, for his part, the need to change the model. The health crisis and the war in Ukraine showed us that we had to break our excessive dependence on China and relocate some of our industries. However, this may increase the price of the products. The same for our energy dependency. », analyze. And to conclude: We are going to have to get out of this model based on very low prices. The great deflationary period that we have known until recently is probably coming to an end ».

The fear of a structurally more expensive world