Inflation spikes in Europe, as Ukraine war amplifies concerns
Pressure is unlikely to fade. On Wednesday, Russia’s state-controlled gas company effectively shut off the supply of natural gas to Poland and Bulgaria and the Kremlin warned that other countries could face the same fate.
Inflation is now substantially higher than the European Central Bank target, which hovers around 2 percent.
The latest figures compound concerns over so-called “stagflation”: a stalling of economic growth that is accompanied by rising prices. Consumer confidence has tanked in Europe, as wages haven’t kept pace with the rapid rise in prices.
According to Eurostat, the E.U.’s statistical office, the eurozone’s seasonally adjusted GDP was only 0.2 percent higher in the first quarter of this year than over the previous quarter. E.U. growth was slightly higher, at 0.4 percent, but also down quarter-on-quarter.
The eurozone is composed of 19 countries that share the euro as their currency. It’s distinct from the European Union, a bloc of 27 member states.
Among the bloc’s major economies, Italy was particularly impacted, with its economy contracting in the first quarter. Growth stalled in France, while Germany did slightly better.
Europe isn’t the only region where economic growth is hampered by the long-term effects of the pandemic and concerns over the fallout of the war in Ukraine.
The U.S. economy unexpectedly shrank at a 1.4 percent annualized rate in the first three months of 2022 after more than a year of rapid growth, according to a Bureau of Economic Analysis report released Thursday.
In the United States, the slowdown — the first since the covid-19 recession in April 2020 — marked a reversal from the torrid pace that followed intense fiscal and monetary stimulus in the wake of the pandemic. Last year, for example, the U.S. economy grew by 5.7 percent, the fastest full-year clip since 1984.
The eurozone economy was estimated to have grown by 5.2 percent last year.
Abha Bhattarai contributed to this report.