Filenews 1 April 2023
Inflation continues to pick up speed, albeit marginally, but inflation remains, particularly in the food sector, with the result that consumers do not see large differences in their costs.
The rate of increase of inflation in Cyprus decreased to 6% in March compared to March 2022, from 6,7% in February, according to the harmonized index of consumer prices of Eurostat announced yesterday. It should be noted that in March 2022, an increase in inflation by 6,2% was recorded in Cyprus, compared to March 2021.
Inflation also slowed down in the Eurozone to 6.9%, up from 8.5% in February. The slowdown is due to the fall in energy prices compared to March last year.
In March the lowest annual inflation rate was observed in Spain 3.1%, Belgium 4.9%, Luxembourg 3%, the Netherlands 4.5%. In Greece, the consumer price index fell in March to 5.4% from 6.5% in February. Countries with a double-digit inflation rate in March are Estonia 15.6%, Croatia 10.5%, Latvia 17.3%, Lithuania 15.2%, Slovenia 10.4%, Slovakia 14.8%.
Regarding the individual elements of the measurement, the increase in inflation was driven by the categories of food, alcohol, tobacco, in which prices jumped at a rate of 15.4% in March (from +15% in February), while non-energy industrial goods showed an annual increase of 6.6% (from 6.8%). This was followed by the services sector with an increase of 5% (from 4.8%) while energy prices fell by 0.9% (after the increase of 13.9% in February).
However, central banks are warning businesses about the profit margins they apply to their products, sending them the message to stop profiteering that fuels inflation.
It is now common for central bankers in Europe, the US and other economies to find that companies are using inflation as a pretext to increase their profit margins. The impact of increased profit margins on inflation was first mentioned by the ECB in its monetary policy communication of mid-March. "High inflationary pressures may indeed be partly due to the greater strength of companies in the market," ECB Executive Board member Isabel Schnabel said in an interview with the Financial Times.
According to an analysis on the ECB's blog, corporate profit margins increased by 9.4% in the fourth quarter of 2022 on an annual basis, contributing more than 50% to inflationary pressures in that quarter, while labour costs (unit of output) increased by 4.7% and contributed less than 50%.
