2023-06-01 20:00:23
Dhe inflation rate in the euro zone fell in May. It was 6.1 percent, after 7 percent in April, as the European statistical office Eurostat announced on Thursday after an initial estimate.
The decline was stronger than analysts had expected. Energy prices are now down on average both month-on-month and year-on-year. Food and services prices rose slightly in May compared to April. But since the price increases for both had been stronger in the previous year, the annual inflation rates for both product groups fell slightly. Statisticians speak of a “base effect”.
The so-called core inflation, which is the rise in prices without strongly fluctuating prices such as those for energy and food, also fell from 5.6 to 5.3 percent.
State intervention plays a role
The development varied greatly depending on the euro country. In Spain, the inflation rate fell to 2.9 percent, not far from the European Central Bank’s (ECB) target of 2 percent. In Luxembourg it has even fallen to 2.0 percent.
In Germany, on the other hand, it fell to 6.3 percent according to the European calculation method of the Harmonized Index of Consumer Prices (HICP), which is used for European comparisons and is therefore slightly above the average. In France, which had a fairly low inflation rate for a long time, it is now 6 percent, similar to that in Germany.
In Italy, on the other hand, inflation was still 8.1 percent. It was still higher in the Baltic States with 10.7 percent in Lithuania, 11.2 percent in Estonia and 12.3 percent in Latvia.
There are several reasons for the differences in inflation rates in the individual euro countries. It is not the same everywhere how quickly changes in energy prices affect consumer prices overall. This is the case relatively strongly in Spain, for example, where the inflation rate reacts particularly to changes in energy prices.
The various state interventions also play a role. The inflation rate in Germany in May was also pushed down slightly by the introduction of the Deutschlandticket, because the prices in regional bus and train transport were lower on average this way. The various state aids to cushion energy prices also had an impact on national inflation rates.
Last but not least, there are also very fundamental differences in the economic structure and economic dynamics of the euro countries, which, for example, have been causing higher inflation rates in the Baltic states all the time.
Contradictory to the experience of many people
The interesting question is: How resilient is this fall in inflation? Many people have the impression that life is getting more and more expensive. It is easy to suspect that the fall in official inflation figures is only intended to calm people down.
Conversely, there are some economists who believe that inflation has actually come to a standstill. They refer to the monthly rate of change in the price level. According to the Eurostat statistics office, inflation in the euro area was 6.1 percent in May compared to the same month last year, but compared to April 2023 it was exactly zero percent.
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