EU: which countries have the highest and lowest inflation rates?

Since the start of the year, France has been the European country with the lowest inflation, along with Malta. In September, inflation stood at 6.2% against 24.1% in Estonia.

Until the middle of the summer, regulated energy prices in Hungary had not been sufficient to keep inflation below the average of that of the European Union, as in Malta for example, but had made the country the only one where inflation was mainly driven by rising food prices between March and August.

France, protected by early measures and its nuclear power

In France, liquid fuels, such as fuel oil, are the item that has increased the most on average since the beginning of the year. The next five items are all related to energy: thermal energy, natural gas, diesel… Then come frozen fruit and edible oils.

Comparing January and September, energy in both cases occupies the majority of the ten price categories having increased the most compared to the previous year. However, gas is the main source of energy used by French households to heat their homes, followed by renewable energies (34%) and fuel oil (14%). 

According to Pierre Jaillet, associate researcher at the Jacques Delors Institute and the Institute for International and Strategic Relations (IRIS), France has been able to maintain such a low inflation rate compared to other Member States, due to the early its tariff shield, by cap or by subsidy, concerning gas, electricity or fuel. “ According to INSEE estimates , between the second quarter of 2021 and the first half of 2022, all of these measures have cushioned the effects of rising energy prices on inflation by almost half. Without this, the effect of energy prices would have been more than 6% on inflation, whereas with the shield, it was limited to 3% .” 

Moreover, France was protected, he recalls, by its lower dependence on Russian fossil fuels.

Estonia, plagued by energy prices

In Estonia, energy has been driving inflation since February 2021. After a short slowdown in the winter of 2022, energy price inflation has resumed its rise since the start of the conflict in Ukraine.

At the beginning of the year, food then shared with gas, electricity or heating, part of the top of the table of inflation in the Baltic country. In September, energy fills, with a few food items (sugar, flour and other cereals, etc.), the first fifteen boxes of this sad picture.

Overall, the country mainly consumes oil and electricity and remains dependent on Russian fossil fuels, which has the effect of driving prices up.

For heating, however, Estonian households mainly use wood . But here too, particularly due to demand, the price of wood is rising, whether in the form of logs  or pellets .

Hungary, at the mercy of Russian energies

In Malta and Hungary, regulated energy prices result in a much more varied picture of inflation.

In Malta, energy prices are frozen; their inflation is zero. As a result, the composition of inflation is shared between food (oils, dairy products, pasta, etc.) and services (electricians, postmen, carpenters, etc.).

In Hungary too, until July, price regulation made it possible to contain inflation in energy prices, transferring it mainly to food, in particular margarine and vegetable fats, bread or pasta. But in August, the Hungarian government removed caps on electricity and gas prices for households consuming more than the national average.

For these households, the measure resulted in a doubling of the price of electricity and an increase of around 700% in the price of gas. For example, a household using 280 cubic meters of gas paid 28,560 HUF until August. Now it will cost him 116,280 HUF for the same volume.

However, gas is the main source of heating for Hungarian households. As in Estonia, wood is becoming an alternative in Hungary… the price of which is increasing (43.8%). The government has, for example, banned the export of pellets  and lifted restrictions on the exploitation of protected forests.

Hungary is the Member State most dependent on Russian fossil fuels. The increase in prices is therefore explained both by this dependence as well as by the devaluation of the forint ” and of the interest rates [of the Hungarian central bank], to respond to this inflation and this devaluation. These rates are climbed to 13%, compared to ECB rates between 0.75% and 1.50%.

The European Central Bank (ECB) forecasts a slowdown in inflation from the first quarter of 2023.