Home Business inflation hits a new record in May at 8.1% over one year

inflation hits a new record in May at 8.1% over one year

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The inflation rate in the euro zone broke a new record in May. It peaked at 8.1% over one year, Eurostat announced on Tuesday, May 31, as the war in Ukraine fueled soaring energy and food prices.

Inflation had reached 7.4% in April for the 19 countries having adopted the single currency, an estimate revised downwards by 0.1 point. These figures are the highest recorded by the European statistics office since the start of the publication of the indicator in January 1997.

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Consumer price inflation has been hitting record highs every month since November. However, it was announced last year as a temporary phenomenon, linked to the strength of the economic recovery after the shock of the pandemic and the disruption of supply chains.

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France less affected than its European neighbors

The invasion of Ukraine by the Russian army at the end of February as well as Western economic sanctions against Moscow changed the situation. They reinforce the surge in prices and raise fears of a sharp drop in gross domestic product (GDP) growth in the months to come.

The surge in inflation primarily affects the energy sector (electricity, oil, gas, etc.). This component of the price index jumped 39.2% over one year in May, after 37.5% in April. But the increase in food prices (including alcohol and tobacco) is also accelerating to 7.5%, against 6.3% in April. The rise also affected industrial goods (+4.2%, after +3.8%) and services (+3.5%, compared to 3.3% the previous month).

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France remains relatively less affected than its European neighbours. With 5.8% inflation in May, it has the second lowest rate in the euro zone behind Malta (5.6%), according to the harmonized consumer price index (HICP) which is used for European comparisons . Inflation is much higher, at 8.7%, in Germany. The highest rates are recorded in the Baltic countries: 20.1% in Estonia, 18.5% in Lithuania and 16.4% in Latvia. Countries bordering Russia, and therefore particularly exposed to the severance of commercial ties with this country.

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