The scourge of inflation means a tough year ahead for Europe
Economies face problems as energy prices and interest rates rise
By Christian Odendahl: European economics editor, The Economist
INFLATION HAD been high for a while. But then, in the summer of 1922, prices started to climb dramatically. A loaf of bread that had cost 0.30 German marks in 1914 was selling for 8 marks in June 1922 and 160 marks by the end of that year. What followed in Weimar Germany was hyperinflation, which led to more than just the collapse of the currency. As Stefan Zweig, a novelist, put it in 1942, “nothing has made the German people so bitter, so hateful, so ripe for Hitler as inflation.”
Exactly 100 years later, Europe is grappling again with high inflation, caused by a European war. Hyperinflation is, fortunately, a very remote prospect: the economies of Europe are strong, and policymakers are committed to keeping debt sustainable and tackling inflation. But in 2023 the full economic impact of price rises, and the energy crunch that largely caused them, will be felt across Europe—leading first to a recession and then to a painfully slow recovery.
