Should Europe be worried about inflation?
The inflation rate in the US rose to 4.2 percent in April, and prices are also rising in Europe. Among other factors, inflation in the Eurozone is being driven by the growth of the Chinese and US economies and the associated rise in oil prices. Not all commentators see this as a cause of concern, however.
Back to normality
Commenting in 24 Chasa, economist Emil Harsev sees the rising prices as as a positive sign that the situation is normalising:
“The pandemic has put the economy into an artificial coma. Since they could no longer sell at the usual prices, companies narrowed their profit margins and lowered prices in order to survive. This is deflation. Now that the economy is starting to wake up from the artificial coma of the lockdown, prices are stabilising once more. This looks like inflation, but economists have long been at odds over whether this process can even be called that. ... What is actually happening is the reawakening of the economy, a recovery process that is associated with a rise in prices because they were previously suppressed by factors external to the economy.”
Not the time for galloping inflation
The post-crisis upswing should be enjoyed with caution, warns Keskisuomalainen:
“The emerging economic boom may also have a downside. Because of the money pumped into the markets for years by the central banks in the US and Europe, inflation could rise sharply. ... The increase in the prices of many raw and other materials is already in the double digits, and in some cases prices have even increased many times over. ... That poses a real threat to economic growth in the coming years. If we start to see galloping inflation, interest rates will rise. That would be a heavy blow to debtors. If the central banks then keep interest rates artificially low, the financial market will freeze, because in times of high inflation no one would lend money at low interest rates.”
Defend food sovereignty
Faced with rising food prices France should follow the Argentinian model, which bans meat exports in order to lower domestic prices, L'Humanité demands:
“It's becoming increasingly difficult for French livestock farmers to make a living, in particular due to the free trade agreements that the EU Commission is constantly negotiating with third countries. Consequently, a country like France must defend its food sovereignty in the same way Argentina is doing. This takes as a starting point that the farmers who produce our food are paid a decent wage. However we know that social, fiscal and environmental dumping take place on a permanent basis, even within the European Union.”
Families with debts will suffer most
The Central Bank of Hungary has announced a rise in key interest rates to curb inflation. Népszava warns of negative consequences:
“The effects will be felt very quickly by indebted companies and households, because bank loans with variable interest rates will become more expensive. Together with the payment moratorium [which allows borrowers to postpone repayments but also makes loans more expensive] this could cause serious financial difficulties for many families.”