Inflation spikes in Europe in January amid rising energy prices

Inflation in the euro area * rose in January, driven by soaring energy prices, which could be further boosted by the ongoing conflict between Russia and Ukraine.

According to a February 23 report, annual inflation in the first month of 2022 was 5.1%, up from 5% in December (5%).pdf) Published by Eurostat, the Statistics Bureau of the European Union. Inflation in January 2021 was only 0.9%. The European Union’s annual inflation rate was 5.6% in January 2022, up from 5.3% in December 2021 and 1.2% in January last year.

“Energy (+ 2.80 percentage points, pp) is the biggest contributor to the annual Eurozone inflation rate in January, with services (+ 0.98 pp), food, alcohol, tobacco (+ 0.77 pp) and the non-energy industry. Continued. Goods (+0.56 pp) “, the report said.

The countries with the highest annual inflation rates were Lithuania at 12.3%, Estonia at 11% and the Czech Republic at 8.8%. Inflation was lowest in France at 3.3%, Portugal at 3.4% and Sweden at 3.9%. Compared to December 2021, inflation in January rose in 19 member countries and fell in eight.

This report is made in the same way that Russia invaded Ukraine. Several Ukrainian cities, including the capital Kiev, have reported explosions. Russia calls the attack a “special military operation,” and Ukrainian President Volodymyr Zelensky has issued martial law nationwide.

The aggression had a major impact on oil prices, exceeding $ 100 per barrel. In early Thursday trading, Brent crude broke through September 2014 highs. Crude oil futures from West Texas Intermediate (WTI) in the United States broke through the peak set in August 2014.

Russia, the world’s second-largest oil producer, accounts for about 35 percent of Europe’s natural gas supply. As such, any action against Moscow could cause oil and gas prices to skyrocket around the world, with Europe particularly affected.

The United States, the European Union, the United Kingdom, and Japan have all introduced new sanctions against Russia following military action against Ukraine.

“German Chancellor Olaf Scholz has ordered to stop the certification process for the Nord Stream 2 gas pipeline. Good. To the brave new world where Europeans will soon pay € 2.000 for 1.000 cubic meters of natural gas. Welcome! ”Dmitry Medvejev, former President of Russia and now Vice-Chair of the Security Council, said on February 22. TweetSuggesting that the price could double soon.

Jeffrey Halley, senior market analyst at OANDA, said one of the factors that could help temporarily put a brake on rising energy prices could be the resolution of Iran’s nuclear deal. Stated. Reuters.. However, concerns about Ukraine and its “broader impact” continue to “support oil prices,” he added, suggesting investors buy oil in dips.

* The Eurozone consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

Naveen Athrappully


Naveen Athrappully is a news reporter covering business and global events in The Epoch Times.

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