Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Is the cost of living crunch starting to ease?

Is the cost of living crunch starting to ease?

Eurozone figures are expected to show inflation slowed down in December, bringing hopes of relief to consumers and governments.

Inflation in the eurozone is expected to have fallen sharply at the end of 2022, giving some reprieve to people struggling to pay bills — and to leaders feeling their wrath.

Record-high rates are expected to have returned to single digits in December, with national data from Germany, France and Spain in recent days showing price increases easing more quickly than forecast. In Italy, inflation also came off its peaks.

Hotly anticipated figures for the eurozone as a whole are released on Friday.

Government programs to limit gas prices as well as falling energy costs and a stronger euro contributed to signs that Europe may be able to start putting the worst of the cost-of-living crisis behind it. That will come as a relief to leaders battling pan-European waves of public discontent, protests and strikes.

Before national data trickled in, a Reuters survey of analysts pointed to inflation slowing to 9.7 percent in December from 10 percent in November. More recent estimates, including those of Pantheon Macroeconomics’ economist Claus Vistesen, put the figure around 9 percent.

Slower price rises will be welcome in Berlin, where government popularity has fallen massively ahead of key regional elections. Increasing numbers of voters fear inflation will undermine private wealth, a key survey showed. Germany's ruling coalition is falling in opinion polls and is on track to lose its majority in the parliament.

In France, the government is keeping a close watch on inflation as it prepares to launch a highly sensitive pension reform next week, framing it as part of a broader effort to improve the country’s economy and boost growth. While price rises in France have been lower than in most eurozone countries thanks to massive government support, the cost of living remains people’s No. 1 concern for the new year, according to opinion polls.

The government this week announced new measures to help small businesses, including the country’s cherished bakeries, cope with soaring energy bills.

Still, President Emmanuel Macron on Thursday struck a cautionary tone. “We're probably not at peak inflation yet,” he said. “We will have prices that go up.”

European Central Bank President Christine Lagarde has sounded equally circumspect.

She has said inflation may jump again in January and February, when previous spikes in energy prices are expected to reach the retail level, before coming down more sustainably later this year.

ECB forecasts from December still show inflation averaging 6.3 percent this year.


European Central Bank President Christine has come under fire from governments fearing the central bank’s tightening will push the eurozone economy into a deeper than necessary recession

And while governments may feel pressure on them is easing, the same can hardly be said for the ECB.

Lagarde has come under fire from governments fearing the central bank’s tightening will push the eurozone economy into a deeper-than-necessary recession, adding to the economic hardship of disgruntled voters.

Falling inflation at the same time as slowing economic activity will expose Lagarde to heftier criticism against her tightening course. Italy, under new Prime Minister Giorgia Meloni, has been particularly outspoken, with senior ministers attacking December's 0.5 percent interest rate hike and ECB pledges to do more as "baffling," "crazy" and “worrying."

While inflation coming down faster than expected may allow the Governing Council to raise interest rates less aggressively overall, the central bank will not shy away from further tightening as core inflation — which filters out volatile components such as food and energy — may still be on the rise and is running at more than three times the ECB’s 2 percent target.

ING economist Carsten Brzeski said the current inflation environment will likely see the ECB raise rates at the next two meetings by a total of one percentage point. It is only after new inflation forecasts become available in March that there could be momentum to pause the hiking cycle, he added. Markets are currently betting on a policy rate of 3.5 percent by mid-year, up from 2 percent now.

As Lagarde put it in December: “Anybody who thinks that this is a pivot for the ECB is wrong. We’re not pivoting, we’re not wavering.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
×