Eurozone inflation at 8.9% in July – 11.5% in Greece

Inflation reached 8.9% in the Eurozone in July, while it reached 11.5% in Greece, according to Eurostat’s data for the harmonized index.

It is worth noting that there was an increase for the eurozone from 8.6% in June, while for Greece the harmonized June index was 11.5%.

Once again, the highest rates were seen in Estonia (22.7%) and Latvia (21%), followed by Lithuania at 20.8%.

Energy is the biggest contributor to price formation (up 39.7% over the +42% registered in June), followed by food, alcohol and tobacco (9.8% from 8.9% in June), non-energy industrial goods (4.5% from 4.3% in June) and services (3.7% compared to 3.4% in June).

The Lagarde move

It is worth noting that exactly one week ago, the European Central Bank announced the first increase in interest rates in 11 years, confirming analysts’ and markets’ estimates that the ECB (which appeared more relaxed) will be forced to follow the path set by the Federal Reserve, the Bank of England and others, in order to tame runaway inflation.

The ECB’s Governing Council reiterated its firm commitment to its price stability mandate, raising interest rates to ensure inflation returns to its 2% target over the medium term, while signaling further hikes the next months.

The Commission’s forecasts for Greece

The Commission predicts a jump in inflation to 8.9% for Greece in 2022, while at the same time it estimates that growth will reach 4%.

According to the European Commission’s summer estimates, headline inflation is forecast to reach 8.9% in 2022 and 3.5% in 2023.

Also, real GDP is projected to grow by 4% in 2022 and slow to 2.4% in 2023.

Two months earlier, in mid-May, in its spring estimates, the European Commission predicted a growth rate of 3.5% and inflation of 6.3% for Greece this year. Due to the significant revision to the 2022 figures the growth rate for 2023 has been revised to 2.1% from 3.1% forecast in the spring estimates.

The Ifo report

Earlier on Thursday, the Ifo institute said inflation in Europe’s biggest economy may have peaked, citing a survey that showed the number of German companies planning to raise prices fell for a third straight month in July.

But LBBW economist Jens-Oliver Niklasch warned that the worst may not be over. “I wouldn’t go so far as to say we’ve peaked yet,” he said, citing uncertainty about energy costs.