Europe, much like other parts of the world, is grappling with inflation levels not seen since the oil shocks in the 70s. In August 2022, inflation in the Eurozone reached 9.1%, up from 8.9% in July 2022 and 3.0% in August 2021.1 Core inflation, a closely watched indicator for price stability, edged higher to 4.3% in August 2022, up from 4.0% in July 2022.
The closest total inflation reached these levels in recent times is during the commodity boom in 2008, when inflation was running at 4% year-over-year.
The causes of this surge in inflation have been well documented. Part of the record savings amassed by consumers during lockdowns (~ €1 trillion in Eurozone according to the IMF) have found their way quickly back into the economy as restrictions have been lifted, while the supply side of the equation has taken much longer to respond, causing bottlenecks and a spike in prices along the supply chain.
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