Inflation, a new record in supermarket prices: "ECB interventions and 200 euro bonuses are not enough, the escalator is needed"

Inflation, a new record in supermarket prices: “ECB interventions and 200 euro bonuses are not enough, the escalator is needed”

L’inflation continues to rise, with i energy prices that also push food ones up. According to preliminary estimates by theIstatin August the national consumer price index recorded a new rise (by 0.8%) compared to July and by 8.4% on an annual basis (from + 7.9% in the previous month).

According to the Institute of Statistics “electricity and the free market gas which produce the acceleration of the prices of energy goods”, Even if the increases are partly mitigated by the lower cost of fuels compared to a month ago. Energy, along with processed food and durable goods push inflation to a level that has not been recorded since December 1985 (when it was 8.8%).

In this situation, Emiliano Brancaccioprofessor of Political Economics at the University of Sannio (Benevento), explains to that “the restrictive monetary policy of ECB it is insufficient to combat the increases, as are the spot interventions like the 200 euro bonus“.

Fly the shopping cart

In particular, looking at the so-called “shopping cart”, prices continue to run unabated. Those of the food goodsfor the care of the house and of the person, in August they grow by 9.7% (from the previous + 9.1%), an increase that has not been observed since June 1984. Instead, i high-frequency purchasing products (from + 8.7% to + 7.8%).

As for theelectric energy, free market prices have grown by 20.5% since July and by 135.9% on an annual basis. Those of the gas they rise by 22.8% compared to July and by 62.5% compared to August 2021. This dynamic it is only partially offset by the slowdown in diesel prices by means of transport (-9.2% the monthly figure), of the gas (-10.4% from July) and heating oil (-6.0%).

In the meantime, again according to Istat, in July i industry producer prices they increased by 5.0% on a monthly basis and by 36.9% on an annual basis (from + 34.1% in June).

“ECB policies? They don’t help citizens “

Meanwhile the European Central Bankin the wake of the US Fed, has increased interest rates, with the aim of extinguishing the inflationary blaze. But for now they are not seen definitive solutions on the horizon.

According to Brancaccio «there is no adequate scientific evidence to confirm the thesis that by moving interest rates the central bank governs inflation“. The action of raising interest rates, he argues, “serves to compensate creditors, i.e. the holders of capital, for the losses caused by inflation. If we rely solely on the action of the central bank, which only regulates the income distributionwe do not solve the problem“.

The possible return of the escalator

For the professor, however, the most effective methods for managing inflation “they rely on forms of price administration and on a tax policy of redistribution towards those who work. And obviously on forms of indexation of wages to prices, the so-called ‘escalator’ for workers“.

The latter, however, comes criticized by several economists. For example, according to the governor of the bank of Italy, Ignazio Visco, could establish the so-called “wage-price spiral”. In practice: the increase in wages it forces firms to raise prices of goods sold and this in turn worsens inflation, in an endless spiral that it would have very heavy effects on the economy.

It should be remembered – argues Brancaccio, however- that theEuropean monetary union it should act as a barrier against this scenario. As wages increase, since exchange rates are irrevocably fixed, firms are unlikely to pass all increases onto prices: they would think twice before raising them, because they would end up with a loss of competitiveness that they cannot completely pass on to consumers“. In practice, for the professor, in theeurozone wages can rise with less risk of triggering a “spiral”.

The criticism of the 200 euro bonus

Finally, Brancaccio rejects the spot interventions such as the 200 euro bonus granted by the Draghi government to workers with an income of up to 35 thousand euros per year. “One-off interventions like this one– he says, lapidary- I am totally insufficientan overall intervention policy would be needed“.

If not enough action is taken in the short periodconcludes the teacher, “we will do nothing but wait for the next recessionwhich creates unemployment and bankruptcies and therefore, in the long run, also dampens them inflationary flares: a scenario that obviously should be avoided“.

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