2023-06-13 22:59:21
DThe good news first: inflation is slowing down a bit. It was not just the inflation rate in Germany that fell below 7 percent for the first time in a long time. The so-called core rate, which is inflation without sharply fluctuating prices such as those for energy and food, which is closely monitored by experts for longer-term developments, has also fallen. This is a serious sign of hope.
But the bad news is that inflation is settling down very unevenly. While heating oil, which you don’t necessarily need in summer, is dragging down the inflation rate with its sharp drop in price, many foodstuffs still show a sharp price increase over the year; apart from a few exceptions such as butter and sunflower oil.
All of this shows that it would still be too early for the European Central Bank to trust that the inflation problems will solve themselves. It won’t be that easy. The “easy games”, the simple ways in which inflation can be reduced, seem to have been exhausted for the time being. It was clear that energy prices would not continue to rise forever like last year and that the delivery bottlenecks from the Corona period would eventually resolve.
Now the central bank has to keep raising interest rates. The last percentage points are often the most difficult when fighting inflation.
#hope #inflation #ECB #stay #tuned