And in March, consumer price inflation increased by 7.6% compared to March 2021, according to preliminary estimates of the German statistical service Destatis, based on the harmonized method of Eurostat. Russia’s invasion of Ukraine has added fuel to the fire, which erupted a year ago. The Eurozone is one of the places where a crazy central bank imposes negative policy rates, and hence negative bond yields and an increasingly negative interest rate on bank deposits, the economy and households. The ECB left its Negative Interest Rate (NIRP) policy unchanged at its last meeting, with the deposit rate remaining at -0.5% and still buying bonds. The ECB’s policies are incomprehensibly reckless in light of the inflation that began to erupt in January 2021. But interest rate hikes – too timid, too late – are now being seen later in 2022. And the ECB has already drastically cut its bond-buying program and will cut it further. From month to month, consumer price inflation in Germany skyrocketed by a horrible 2.5% (30% on an annual basis!). Both inflation figures, 7.6% year-on-year and 2.5% month-on-month, shattered the already high expectations that economists had dared to have. According to the German method of calculating inflation, consumer prices rose by 7.3% from a year ago, the highest since 1981, according to Destatis. The agency cited energy costs (+ 39.5% year-on-year) and “supply congestion” that caused commodity prices to soar by a total of 12.3%. Food prices increased by 6.2%. In Spain, consumer price inflation rose by 3.0% in March from February (36% year-on-year!) And by 9.8% year-on-year, the highest since May 1985, according to preliminary estimates. Spanish Statistical Office INE today. But this rise took off in March 2021 and by December 2021 had already reached 6.5%, the highest since 1990. The war in Ukraine that caused a further escalation of already rising energy costs made it even worse: In February, three European countries had already reported double-digit year-on-year inflation: the Czech Republic (10.0%), Estonia (11.6%) and Lithuania (14.0%), with Belgium not far behind. very much (9.5%). March will be much worse. The Czech Republic’s central bank, which is not in the eurozone and can still set its own monetary policies, has already quadrupled its policy rate, from 0.5% in July last year to 3.5% in the most recent meeting in February. And for a much-needed humor for inflation: In non-EU Turkey, Erdogan began the pounding of the pound by firing unruly central bankers and replacing them with cut-off rates, cutting his policy rate by 5 percentage points. at 14%. And inflation has now exploded at 54%, from 16% a year ago. Do you like reading WOLF STREET and want to support it? Using ad blockers – I totally understand why – but want to support the site? You can donate. I appreciate it unlimited. Click on the beer and iced tea mug to learn how: Would you like to be notified by email when WOLF STREET publishes a new article? Register here.