PARIS (NY Times) — Soaring
energy and food prices driven by war in Ukraine pushed inflation in Europe last month to levels not seen in four decades, with prices in the 19 countries that use the euro soaring 7.5 percent, according to data released Friday by Europe’s statistics agency.
The unprecedented run-up in prices from already record levels was the latest marker of just how rapidly the impact of the war in Ukraine is coursing through Europe’s economy, putting pressure on the European Central Bank to begin raising interest rates, possibly before the end of the year.
“The rate of inflation has once again come in considerably higher than we expected,” Joachim Nagel, the president of Germany’s Bundesbank, said on Twitter. “Monetary policy should not pass up the opportunity for timely countermeasures.”
Surging energy costs have posed the biggest threat, causing a sharp spike in costs for European businesses and households and lashing Europe’s economic rebound from the COVID-19 pandemic. Energy prices rocketed nearly 45 percent in March from a year earlier, as the conflict has caused dizzying jumps in natural gas, electricity and oil prices.
Europe and the United States are making ambitious plans to reduce reliance on Russian energy to offset the threat to the European economy and energy security. Last week, the United States agreed to increase shipments of natural gas to help wean Europe off Russian energy.
Germany, the biggest user of Russian energy in Europe, is also aiming to slash in half its imports of Russian oil and coal this year, and end its dependence on Russian natural gas by the middle of 2024. Europe’s largest economy, Germany is already suffering an economic blow from the crisis. The German Council of Economic Experts, which advises the government in Berlin, this week slashed its forecast for growth in 2022 by more than half, to 1.8 percent.
Adding to the economic strain on Europe are surging food costs, as supplies of wheat, corn and barley remained trapped in Russia and Ukraine, which produce a major portion of those crops for world consumption.
Prices for unprocessed food rose at an annual rate of 7.8 percent last month, Eurostat said. Since the invasion, global wheat prices have increased 21 percent, barley 33 percent and some fertilizers 40 percent, threatening a food crisis.
Even without food and energy, core inflation in the eurozone also continued to rise as inflation in goods and services accelerated.
The biggest overall increases were recorded in Lithuania (15.6 percent), Estonia (14.8 percent) and the Netherlands (11.9 percent). Consumer prices in Germany leaped 7.6 percent compared with last year, and 9.8 percent in Spain.