Inflation in the EU: Form, Causes and Anti-inflationary Policy

The article consists of two parts. The first part examines the theoretical issues of the nature of inflation, the mechanism and forms of its implementation. The author substantiates the idea that any inflation, regardless of which country and in which period it is realised, is always based on an increase in the cost of production and sale of goods. This growth may have different reasons: an increase in monetary demand, imports of more expensive goods, monopolistic regulation, etc. Depending on these reasons, separate forms of inflation should be distinguished. The second part is devoted to the analysis of the causes of modern inflation in the EU and the measures of the European Central Bank to prevent price increases. It shows that inflation in the regional association belongs to the category of imported, as it was caused by a huge increase in world energy prices, the supply of which to Western countries was limited by anti-Russian sanctions. As proof, the author cites Eurostat figures, which show that overall inflation in the euro area increased significantly following the rise in energy prices, and then began to decline as energy prices stabilised. Arguments are also presented that the ECB’s increased key rate, effective from autumn 2022 to June 2024, was not the main reason for the decrease in inflation in the euro area. In this regard, the author concludes that the Central Bank’s anti-inflationary measures were unnecessary, and at the same time hindered economic growth in the region.

inflation, forms, causes, price interrelation, EU, ECB, anti-inflationary policy, key rate