LONDON (AP) – Inflation in Europe rose to another record, according to new EU figures released on Friday, in a fresh sign that soaring energy prices, fueled by Russia’s war in Ukraine, are hurting consumers pressure and increase the pressure on the central bank to raise interest rates.
According to the European Union’s statistics agency, Eurostat, consumer prices in the 19 countries that use the euro currency rose at an annual rate of 7.5 percent in March.
The latest reading only broke the peak last month when it hit 5.9 percent. It is the fifth consecutive month that euro-zone inflation has hit a record high since records began for the euro in 1997.
Rising consumer prices are a growing problem around the world, making it difficult for people to afford everything from groceries to their utility bills. Soaring energy costs are the main driver of inflation in Europe, with prices rising 44.7 percent last month from 32 percent in February, Eurostat said.
Oil and gas prices had already risen on rising demand from economies recovering from the depths of the COVID-19 pandemic. They edged higher after Russia, a major oil and gas producer, invaded Ukraine amid fears sanctions and export restrictions could limit supplies.
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Eating out in Europe is also getting more and more expensive. Grocery costs, including alcohol and tobacco, rose 5 percent, compared with 4.2 percent in the previous month.
Mina Agib, who runs an Egyptian restaurant called Meya Meya in Berlin, said prices for frying oil and meat have risen by 70 percent to 100 percent recently.
“Who isn’t affected?” Agib replied when asked if he felt the impact of rising prices.
Two weeks ago, one of its suppliers said meat prices would rise by 70 cents (77 cents) per kilogram, Agib said. “They told us to expect another increase next week.”
In order not to lose money, Agib had to increase the price of some dishes. One customer, furious at having to pay half a euro more for a plate of cold cuts, dips and salad, wrote a negative online review – the first since his restaurant opened more than a year ago.
“We’re between a rock and a hard spot,” he said. “We want to make our customers happy with quality ingredients and homemade food. But we also have to pay the prices our suppliers charge.”
At an outdoor market in Cologne this week, shopper Andreas Langheim also complained that life was getting more expensive.
“I see the impact of rising prices, especially here in the market,” said Langheim, 62, as he retrieved bread from a bakery trolley. “Everything is more expensive now”
Prices also rose 3.4 percent for goods such as clothing, home appliances, cars, computers and books, up from 3.1 percent the previous month, and for services, up 2.7 percent from 2.5 percent.
The latest numbers make it more urgent for the European Central Bank to step off the sidelines and take action, analysts said. The bank balances record inflation with the risk that war could hurt a troubled economy. Last month it accelerated its exit from stimulus efforts to fight inflation but has taken no more drastic steps.
“We believe the ECB will soon conclude it can’t wait any longer before starting to hike interest rates,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics, in a report.
Other central banks have started raising interest rates, including in the US, where inflation has risen to a 40-year high of 7.9 percent. European countries that don’t use the euro, including the UK, Norway and the Czech Republic, have done the same.
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Italian Prime Minister Mario Draghi, a former European Central Bank President, outlined how the problem is hitting households.
“Inflation is rising because the prices of commodities are rising, especially food. These are the ones that hit a family’s spending power the hardest,” Draghi told foreign journalists on Thursday. “The shortage of some raw materials leads to a bottleneck in production and forces further price increases.”
Draghi said as long as inflation remains temporary, governments could respond with fiscal measures, such as payments to help low-income families with higher heating and electricity bills. But if it becomes a longer-term problem, the answer has to be structural, he said.
Italy’s construction industry has sounded the alarm as inflation threatens jobs on thousands of public and private construction sites. It warned that the sector could not only slow but grind to a halt due to the rising cost of fuel and raw materials, including iron, reinforced concrete and steel, the price of which has doubled.
Associated Press journalists Frank Jordans in Berlin, Daniel Niemann in Cologne, Germany, Frances D’Emilio in Rome and Colleen Barry in Milan contributed to this report.