Inflation brings down the Euro Area, but it is not the real problem
Even the Euro Area, after Germany, is shattered by very strong winds of inflation, such as to reach double digits. Yet this is not the main problem of our economy. T he annual inflation rate in the Eurozone jumped to 10% in September 2022 from 9.1% in August, reaching double digits for the first time in history, according to preliminary estimates. The data compare with market forecasts of 9.7%. This is the fifth consecutive month of rising inflation, with prices showing no signs of a peak, at a time when the pressure has already spread from energy to other items. The fastest increases were recorded for food, alcohol and tobacco (1.8% versus 10.6% in August), energy (40.8% versus 38.6%), goods non-energy industrials (5.6% versus 5.1%) and services (4.3% versus 3.8%). Among the major economies of the bloc, Germany recorded the highest inflation rate (10.9% vs 8.8%), followed by Italy (9.5% vs 9.1%), while inflation in Spain (9.3% vs 10.5%) and France (6.2% vs 6.6%) slowed down.
Here is a graph showing the exceptionality of the situation:
In fact, the inflation problem for the Euro Zone is not the main problem. The problem is IN THE TYPE of inflation, imported for energy purposes, which on the one hand cuts the income available for families, on the other it displaces our companies on international markets, making them absolutely uncompetitive. All things that the Euro should have protected us from, but which in reality it absolutely fails to alleviate.
A warning sign of this fact is the collapse of the trade surplus and its transformation into a black hole of trade deficit, certainly also due to the higher cost of energy imports, but which already indicates the inability of the European industry to rebalance them with the industrial export
Given the inability, or unwillingness, to overcome energy problems by exploiting internal sources, the solution will come on the one hand from a progressive drainage of citizens' purchasing power, with a prolonged economic depression, and on the other from a closure of the European economic system itself. An ideology born for globalization will convert to protectionism, probably with the alibi of international conflicts, but, in this way, it will turn into a sort of black hole of world wealth.
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The article Inflation breaks down the Euro Area, but it is not the real problem comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/linflazione-abbatte-leuro-area-ma-non-e-il-vero-problema/ on Fri, 30 Sep 2022 11:00:20 +0000.