Filenews 30 April 2022 - by TheanoThiopoulou
Faced with a new inflationary shock that reached a record of 8.6% in April, households found themselves, which significantly reduces the purchasing power of incomes and worsens the standard of living, as the wave of accuracy increases every month at a speed and seems to be a long way off the day to record a decline.
The preliminary estimate announced yesterday by Eurostat for April shows that inflation in Cyprus is estimated at 8.6%, from 6.2% in March, 5.8% in February, 5% in January and 1.2% in April 2021!
Annual inflation in the euro area is expected to average 7.5% in April 2022, up from 7.4% in March, according to Eurostat estimates. Inflation in Cyprus has even surpassed the average inflation rate in the Eurozone, in contrast to the last few months, which was below the Eurozone average, something that the Ministry of Finance has noted with satisfaction many times. A characteristic of the leap made by Cyprus is that in April the price index increased by 3.1%, compared to March.
What is worrying is that yesterday's Eurostat estimate predisposes that the consumer price index to be announced by the Statistical Service of Cyprus on 5 May will be increased by about one percentage point for April, that is, just below 10%! Eurostat calculates inflation on the basis of the harmonised index of consumer prices, i.e. uniform weightings of products and services for all euro area countries, while the Statistical Office has a different weighting for the "basket" of products and services.
Eurostat data show that price rises in energy products are responsible for around 60% of the increase in European inflation and are the main cause of keeping Eurozone inflation above 7% for the second month in a row.
But what does inflation mean in practice for households? The inflationary shock of recent months has significantly reduced purchasing power and living standards, especially of the low-paid, who consume a significant part of their wages to buy absolutely necessary products, which are priced up almost every month. At 1,000 euros in April, the purchasing power of employees was 914 euros (86 euros evaporated due to inflation), at 1,500 euros the purchasing power was 1,414 and at 2,000 euros the real value was 1,914. Of course, the losses are even greater when the calculation is made with the percentage of the consumer price index that will be announced by the Statistical Service and as we have already mentioned, the consequences are more serious for the low-paid strata.
The continuous increases in inflation are also negative for deposits. Not only do depositors have no benefits due to zero interest rates, but they also suffer losses from inflationary pressures on the economy. The Ministry of Finance, at a time of prolonged uncertainty and instability, as there does not seem at the moment to be any particular optimism about the end of hostilities in Ukraine, is expected to proceed with a revision of the targets for the course of the economy for this year, which will be reflected in the Stability and Growth Programme to be submitted to the Commission.
Inflation in Europe
Based on preliminary estimates published by Eurostat, the first places with high double-digit inflation rates are Estonia (19%) Lithuania (16.6%), Latvia 13.2%), the Netherlands (11.2%) and Slovakia (10.9)%. In Greece inflation is estimated at 9.4%, in Belgium 9.3% and in Luxembourg 9%. In Spain inflation for April is estimated at 8.3%, in Germany 7.8%, in Slovenia 7.4%, in Portugal 7.3%, in Italy 6.6%, in France 5.4% and the lowest is in Malta, 4.9%.
