Prices have risen by 6 percent in one year. In April, it was mainly foods such as meat and vegetables that became more expensive.
Many people kept their money when the pandemic made it difficult to travel abroad, go to a restaurant, sports or culture. So it was expected that inflation would increase when the world opened up.
The restrictions also led to a lack of much needed to keep the world’s production wheels rolling. Everything from semiconductors to shipping containers.
And then came the war. First with higher prices for energy and fuel. But soon also with more expensive food, because Ukraine and Russia are major suppliers of both cereals and fertilizers.
Everything is getting more expensive
The political response to Putin’s prices so far has been to compensate for individual price increases. Last winter, governments competed with each other over who could send the most money to the home and car owners.
That choir has fallen silent. For now, prices are not just rising for some individual goods. Everything is getting more expensive.
Keeping inflation down is the central bank’s task. And they are now raising interest rates and withdrawing the stimuli they put in place during the pandemic. But they do not control the basic problem. As long as there is a major war in the middle of Europe, prices will continue to rise.
Next year’s contract movement has all the prerequisites to be really tense. Especially if the policy fails to protect the purchasing power of those who have the smallest margins.
Even out the class gaps
But there is much that can be done to prevent poverty from spreading. A first step is to increase the guarantee pension significantly and the raising of children and housing allowances.
If the politicians do not succeed in supporting those who have the smallest margins, more and more people will have to go to the municipalities’ social services offices to get their finances together when prices rise.
The rich do not need gifts
In recent decades, class differences have increased sharply in Europe. Those who have earned on employment tax deductions abolished wealth tax and the rampant stock market and property values have good margins to cope with the price increases.
High-income earners do not need more gifts. But those who count the pennies before salary every month to make it go together can not afford the rising inflation prices.