In this material, the reader will get acquainted with the analysis of euro inflation in the European Union over the past few years. In addition, for comparison, we present figures characterizing the increase in the cost of goods and services in the zone of circulation of the single European currency.
Eurozone
Here it is necessary to specify what is at stake. The Eurozone is a kind of association of nineteen EU states, which use a common and single currency as a monetary unit. This is the euro.
It should be emphasized that both in the European Union as a whole and in the Eurozone, euro inflation is determined using the HCP - the harmonized index of consumer prices for goods and services. This indicator is calculated using a common methodology for all EU members. This applies unified definitions and a standard set of goods and services.
It is necessary to clarify that the consumer price refers to the final cost that the buyer pays for a product or service. In this case, all taxes and other mandatory fees should already be taken into account. The consumer price index has been determined since 1996, whenand the Eurozone was created. Information on euro inflation by years is presented below.
EU deflation
In mid-2015, the EU economy showed a trend towards renewed deflation. For example, in September, euro inflation decreased by 0.1% compared to the previous month. This happened for the first time in six months and forced the ECB to launch a quantitative easing program. It involves an additional issue of the euro. Some experts note that this program may be launched until mid-2018, and not as originally planned until September 2016.
Emission volumes may amount to 2.4 trillion euros. This amount is almost double the amount originally planned, but this should lead to a decrease in the value of the European currency against other major currencies. Nevertheless, despite the additional issue of the ECB, inflation has not reached the level expected by the expert community.
Euro in 2016
Inflationary processes in the European Union most affected the energy sector. Thus, electricity in September increased in price by 4% compared to August 2016. At the same time, the cost of basic foodstuffs rose by only 1.4%. If we do not take into account the rise in the price of electricity and food, then the overall euro inflation rate in the EU amounted to 1.2%. Thus, the forecasts of the European Central Bank did not come true.
It should be noted that this financialInstitutional indicator of the increase in the cost of goods and services in the euro area was 2%. This level of inflation was achieved only in two countries: Spain and Belgium. As for Germany, its economy was close to this indicator. Here inflation was 1.8%. The highest rates of increase in the cost of goods and services were recorded in such countries as Lithuania - 4.6%, Estonia - 4.2% and Latvia - 3.2%. The lowest level of inflation was observed in Ireland, Greece and Cyprus. Here it did not exceed 1%.
Taking into account the permanent economic growth in the Eurozone countries, the European Central Bank has planned to make some adjustments to its own government bond purchase program. By the way, it will be noted that this project caused the greatest controversy primarily in Germany. The ECB is going to provide the European economy with a breath of fresh air through the purchase of government bonds and stimulate inflationary processes. Analysts predict that monthly volumes of such purchases will be reduced already in 2018.
Euro in 2017
July 2017 euro inflation rate was 1.3%, and rose to 1.5% in August. These data are provided in the official Eurostat report. In general, in the European Union, the increase in the level of the cost of goods and services was 1.5% in July and 1.7% in August 2017. At the same time, it should be noted that the August inflation of the euro in 2016 and outside the Eurozone in the EU was 0.2% and 0.3%, respectively.
Necessaryto say that the ECB as of September 2017 changed its forecasts regarding the increase in the cost of goods and services in the Eurozone. New data suggest lower inflation rates. Thus, in 2018, prices in the euro area were predicted to rise by 1.2%, which is 0.1% less than previous expectations. Inflation in 2019 is projected at 1.5%, while the previous target was 1.6%.
EU inflation in 2018
At the beginning of 2018, the following inflation figures were recorded in the EU. In January, prices decreased by 0.88% compared to the same month in 2017. In February, inflation was recorded at 0.24%. Compared to February of the previous year, there is a decrease in price growth by 0.14%. In general, inflation in 2018 is currently -0.65%. In other words, there is deflation. In annual terms, this is -1.16%. Deflation again.
At the moment, the Eurozone is in fifth place in the world in terms of inflation.
