Euro-zone inflation is breaking record after record, but the gap between the highest and lowest rates among the currency bloc’s 19 members has also jumped to its widest ever.
The scale ranges from Malta — where consumer prices advanced 5.6% last month, to Estonia — where inflation hit 20.1%. That’s a difference of more than 14 percentage points, more than at any time since the dawn of the euro in 1999.
The mismatch is largely down to national policies: Some governments are less eager to regulate electricity markets, where costs have soared following Russia’s invasion of Ukraine. And some offer households more help than others to weather the price spike.
“I’m sure over time everyone will feel the energy shock in a similar way,” European Central Bank Chief Economist Philip Lane told a conference this week in Paris. “But there are differences between countries in how they will pass through to prices.”
Nevertheless, the predicament presents an additional challenge for the ECB as it seeks to raise interest rates from record lows without derailing the continent’s pandemic rebound as the war on the euro area’s border saps confidence.
Among euro-region members, six have inflation rates of more than 10%, led by the three Baltic nations that joined the bloc most recently.