Inflation and price indices in Europe - Statistics & Facts

The term inflation means the devaluation of money caused by a permanent increase in the price level for products (consumer goods, investment goods). In May 2017, the inflation rate in the Euro area reached 1.4 percent compared to the same month of the previous year. As of June 2017, Lithuania had the highest inflation rate in the Euro area. On the other end of the scale, in a ranking of the 20 countries with the lowest inflation rate in 2016, other European countries can be found, namely Bulgaria, Cyprus, Croatia, Bosnia and Herzegovina and Poland. According to the International Monetary Fund, the inflation rate in the European Union and the Euro area is expected to maintain a growing trend up to 2020.

The Consumer Price Index (CPI) shows changes in the prices paid by urban consumers for a representative basket of goods and services. Those goods and services are broken into eight major groups: food and beverages, housing, apparel, transportation, medical care, recreation, education, communication and other goods and services.

Starting with food and beverages and taking Sweden as example, it is possible to see how the rise in the inflation rate in 2016 was produced by a rise in the Index of Consumer Prices, which is partially identified as well with the rise in the price of food and non-alcoholic beverage in the same year. The same can be said for housing prices; Looking at Belgium, a growth in the inflation rate in 2016 can be tracked back to the increase in prices of the so-called "basket of goods", which includes an increase in housing prices.

The same idea can be applied to every country that witnessed a rise in inflation rates, and the opposite happens when a decrease in the rate of inflation is observed (deflation). Taking into account, for example, Bulgaria, it can be seen that the deflation in 2016 was also caused by a decrease of the cost of food over the same year.

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France 2019

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