Inflation in the European Union and the euro area rose sharply in August, reaching its highest level in almost a decade. Across the 27 EU countries, inflation rose to 3.2 percent from 2.5 percent in July. In 19 countries that use the common currency, the euro, inflation has reached three percent. This is an increase of eight tenths of a percentage point compared to July. This was announced today in its final report by the European statistical office Eurostat.
For the first time, inflation thus significantly exceeded the European Central Bank’s (ECB) target. It intends to keep price growth at two percent per year in order to revive the economy. The central bank estimates that the current rapid rise in prices is only temporary and expects inflation in the euro area to be 2.2 percent for the whole year. He expects inflation to fall back below 2% next year. Last week, however, in response to recent developments, the central bank also announced that it would slow down bond purchases, which it seeks to support economic growth in the euro area negatively affected by the pandemic.
The current situation in the entire European bloc and in the euro area differs significantly from the state of inflation a year ago, when the first wave of the pandemic hit the economy hard. In the EU, prices rose by 0.4 percent last August, while in the euro area they fell by 0.2 percent.
Compared to July this year, consumer prices rose in August 26 in the Union’s countries, with inflation in Finland only remaining the same. Malta had the lowest inflation, at 0.4 percent. In Greece, prices rose by 1.2 percent and in Portugal by 1.3 percent. On the other hand, prices grew the fastest in Poland, Lithuania and Estonia, where the inflation rate reached the same five percent. In the Czech Republic it was 3.1 percent, which was an increase of four tenths of a point compared to July.