One interest rate, three inflation realities. Why Europe’s price shock is so uneven - Euronews.com

Three countries share one currency and one central bank rate, yet their inflation rates differ by more than twofold. In September, annual inflation was 2.7% in Finland, 3.3% in Germany and 6.1% in Lithuania, according to Eurostat’s harmonised index (HICP), published in October. The euro-area average was 3.8%. All three face the same European Central Bank (ECB) deposit rate of 2.50%. The common thread is energy. Eurostat data show energy prices across the euro area rose 18.9% in September, adding 1.71 percentage points to inflation, almost half the headline figure. Excluding energy, euro-area inflation was 2.3%. How that shock plays out depends on a country’s energy mix, tax choices and the strength of its domestic economy.