Inflation rates in the Eurozone, as expected, continue to rise. The increase in the producer price index in February this year has already set the direction for further movement. Analysts' forecast made in the winter is now being confirmed: "The consequences of this shock will not leave consumer price indices unscathed and will cause an increase in consumer-perceived inflation."
In Germany, inflation today even exceeds the records of the 1970s: with inflation at 7.9% and key interest rates at 0, the ECB runs a huge risk of plunging the continent into an unprecedented social crisis. Never before has the divergence between the ECB interest rate and inflation been so large. Inflation in Germany reaches its highest level in 60 years!
Since the producer price index continues to rise and, in addition, there is a significant lag between producer prices and consumer prices, it is regrettable that inflation in Germany will not move downward in the short term. According to the latest data, the Producer Price Index is actually up 33.5% from the previous year! This is the highest value since 1949!
In Spain, inflation is, oddly enough, rising again, after declining in the previous month. It currently stands at 8.5%, although most observers expect it to decline further. The renewed growth is driven primarily by purely structural components (the so-called core inflation).
In France, the consumer price index is lower (+5.2% yoy, +4.8% in April), but the poor performance of the producer price index (+27.8%) raises concerns about rising inflation in the summer.
Inflation in Europe will significantly exceed the last five forecasts from ECB economists. The failed forecasts of European Central Banks will be remembered as a serious mismanagement of the continent's monetary affairs.