Inflation is falling in the Eurozone to the detriment of economic activity which is stalling

2023-11-30 18:21:44

The price increase has never been this low in two years. It stood on average at 2.4% in November. It slowed down sharply in Portugal, Italy and France +3.4%. A drop in inflation which can be explained by the monetary policies carried out by central banks.

Published on: 11/30/2023 – 5:21 p.m.

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The sharp rise in rates has also done its work. Restrictive policies which have paralyzed certain sectors and which mechanically slowed inflation, explains economist Henri Sterdiniak. “ The choice of the European Central Bank in increasing its interest rates was to slow down activity. The ECB gets what it wants, which is a depression in the European Union ».

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The effect of rising prices for raw materials and energy is behind us. But the economic slowdown in the third quarter is significant in the euro zone. “ Inflation has been defeated, but it is not an economic success to the extent that naturally this raises the question of how to revive activity now, how to avoid rising unemployment. You have to restart the machine », continues the economist.

Rates are not expected to increase

For the governor of the Bank of Italy Fabio Panetta, the ECB must avoid causing “ unnecessary damage » to the economy and financial stability. Rates should no longer increase, explains Pascal De Lima, chief economist at CGI Business. “ There is no longer any reason to increase rates, especially since there is a real credit problem facing us. We also need individuals, the French, to be able to access housing, to be able to access credit, so I don’t think we’re going to raise rates from now on. ».

It remains to be determined whether current rates are compatible with the objective set by the ECB of inflation at 2%.

We must not declare victory right away. The indices among purchasing managers in the very heart of corporate activity are still at half mast. We are very far from having rectified the situation.

Pascal De Lima, chief economist at CGI Business

Alexis Bedu

Italy is a good student

With inflation falling from 0.8% over one year, compared to 1.7% in October, according to preliminary data published by the National Institute of Statistics (Istat), Italy is a good student of the euro zone , reports our correspondent in Rome, Anne Le Nir. The slowdown in inflation is due, above all, to energy prices, regulated or unregulated, which have fallen considerably in recent months. In addition, the prices of processed foods, which have doubled in the space of a year, have slowed their rise and the Meloni government signed, at the end of September, a pact for the protection of purchasing power until December 31 .

But it is mainly large brands which have agreed to block the prices of certain foods and products for children or cleaning products. And, as the economic daily observes The sun 24 hours, prices of unprocessed food products, particularly fish, vegetables and fruits, continue to soar. Consumer associations therefore hope that inflation will continue to fall in 2024 to better meet the food needs of families.