The International Trade Council (ITC) has noted a significant easing of inflation across Europe, with rates falling to 6.1% from 7% in April 2023, as reported by Eurostat. Despite this decline, the ITC recognizes the ongoing strain on consumers, who are still grappling with high prices for food and other essential goods.
Europe's largest economies have recorded a decrease in inflation, with Germany experiencing a drop to 6.1%, France to 5.1%, and Italy to 7.6%. Although this dip indicates a positive direction, economists caution that consumers might have to wait for several months before they see normal inflation levels reflected in retail prices.
Factors such as Russia's war in Ukraine and other global influences have driven costs to a high level. While price increases are slowing, they compound on these previously heightened costs. Despite these challenges, energy prices have decreased by 1.7% year-on-year, contributing to the lower overall inflation figure. Meanwhile, food prices, although still high, increased at a slightly slower pace of 12.5% in May, compared to 13.5% in April.
The ITC empathizes with consumers facing these inflationary pressures and recognizes the need for more robust measures to mitigate the impact of rising costs. In particular, the soaring food prices represent a painful pinch for consumers and are a matter of concern.
The ITC also acknowledges the effort of governments in circumventing an energy crisis by diversifying their sources of natural gas and the various subsidies provided to soften the blow of high energy prices on households and businesses. These steps, combined with an expected additional interest rate increase by the European Central Bank, are likely to slowly steer inflation towards its target rate of 2%.
The ITC will continue monitoring the situation, providing members with timely updates and guidance during this period of global economic fluctuation.
For more information, please visit the ITC website.
