Sunday, February 19, 2023

Global Capitalism Requires Global Solution

 The cost of consumer goods in France jumped 6% in January in annual terms from 5.9% in December, conclusive data by the country’s statistics agency Insee showed on Friday.

The higher consumer price index (CPI) rate was prompted by an acceleration in food costs, which were up 13.3% year-on-year, and in energy prices, which soared 16.3%. The price increases of manufactured goods and those of services have slowed, according to Insee.

The report showed that seasonally adjusted, consumer prices increased by 0.8% over a month.

The core rate, which excludes items with volatile pricing such as unprocessed food and energy, increased to 5.6% in January from 5.3% in December. Meanwhile, the European harmonized CPI was up 0.4% on the month and 7% on the year.

According to a Bank of France forecast, inflation in the country will peak in the first half of 2023, after which it will gradually slow to about 2% by the end of 2024. In December, it was reported that French food manufacturers had asked retailers to raise product prices by 15-25% from the beginning of 2023 amid inflation and rising production costs.

Economists expect inflation in the country to start easing once increases in energy prices subside. Its Finance Minister Bruno Le Maire has said that the country’s top economic priority was to bring down energy prices and spiralling inflation.”

Band Aid Not The Solution

The Spanish social affairs minister, Ione Belarra, has called on the government to bring down prices of basic products by introducing discounts, as food costs continue to rise in the country amid double-digit inflation.

A reduction in value added tax (VAT, known in Spain as IVA) has proven insufficient as prices for essentials are still “the highest,” Belarra posted on Twitter on Thursday. She urged the ruling Spanish Socialist Workers' Party (PSOE) to subsidize the basic consumer basket by 14%.

The minister also proposed bringing prices down to levels seen prior to the conflict in Ukraine, adding that Spanish “families can't wait any longer.” She argued that the proposed subsidy would help mitigate the impact on consumers of soaring inflation, and even suggested a price intervention.

Food inflation in Spain has remained over 15% despite an IVA cut on some basic products. In January, inflation eased from 15.7% recorded in December, but was still raging at a rate of 15.4% for food and non-alcoholic drinks, the National Institute of Statistics (INE) reported on Wednesday.

Cash-strapped households in Spain have taken a hit from surging costs of most meats, fish, yoghurt, butter, cereals, coffee, tea and baby food, as these items were not classified as basics and did not receive a tax cut.

The overall January inflation reading was higher than INE expected, and stood at 5.9% with a 0.6% rise from December.”

Dave C


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