Red hot inflation is inescapable everywhere in the U.S. It is discussed daily on the news and experienced at gas stations, supermarkets, and just about everywhere money is spent as prices continue to rise. It is one of the most serious dilemmas that the country is facing at the moment. However, increasing rates of inflation is not just a U.S. problem, it is plaguing Europe as well. The article, "German Inflation hits 70 year high as economist warn of recession risk", highlights Germany's annual inflation rate has risen 10% in September year over year, from 7.9% in August exceeding economist's estimates of a 9.5% increase. This level of inflation hasn't been seen since the aftermath of World. War II.
This inflation should come as no surprise. Russia's invasion of Ukraine paired with global supply chain issues that have been felt since the start of the COVID-19 pandemic, have caused prices to skyrocket. Energy prices have risen 43.9% in September year over year, while food prices have increased 18.7% year over year.
As rationing of remaining Russian energy continues, it is likely that this economic hardship will persist. The German government is advising its population to save energy as much as possible to endure the winter, citing that gas consumption by consumers and businesses has, on average, risen by 14.5% as temperatures drop in Germany each winter over the past four years. However, this article states "heightened risk" of rationing and shortages can be avoided if Germany reduced its gas consumption by 20% and increased its gas imports. The downside to this strategy would be a lower GDP for the foreseeable future as imports grow.
The Europeans have taken an almost identical approach to lowering inflation as the U.S. According to Carsten Brzeski an economist for the Dutch bank ING, the European central bank will continue to raise interest rates in order to combat this soaring inflation. However, as gas scarcity grows across Europe, inflation is likely to continue to rise.
https://www.ft.com/content/877ecb30-b884-42d0-afc4-17b7d404a5a1
The high inflation in Germany makes me wonder about the other countries of Europe. Are all the countries in Europe faced with major economic issues like high inflation right now? Is Germany the worst or just one of the many struggling?
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