Europe’s inflation: ‘I can’t see the light’: War fuel prices rise in Europe

Eduardo Ranzoni visited a construction site near Milan that he closed in March because of skyrocketing prices. He can’t complete a half-built roundabout at a crossroads known to Fender-Bender because asphalt, cast-iron pipes and concrete are too expensive – prices have risen due to Russia’s war in Ukraine.

Public works projects in Italy are being shut down just as the European Union is injecting 108 billion euros ($ 114 billion) to start a construction frenzy in a bid to recover from the epidemic.

Ranzoni regrets that his company has already lost its three busiest months and hopes the worst is yet to come: “We fear we will not be able to operate this year. We are shutting down all our sites.”

The war has accelerated inflation in Europe and around the world, with energy, materials and food prices rising at a rate not seen for decades. This is causing sticker shocks at grocery stores, gas pumps, electricity bills and construction sites.

Rising oil and gas prices are the main driving force behind inflation in Europe, which relies heavily on Russian energy to generate electricity and the power industry. Inflation in the 27-nation EU is expected to hit around 7% this year, and growth forecasts are contributing to the slowdown.

Fishermen and farmers are being forced to catch them and pay prices for crops that they even see as astronomy. High fuel prices threaten to cripple the soil

Commodity Bread prices are rising from Poland to Belgium. Protests have erupted in places like Bulgaria to protest rising prices. Although governments have responded with tax cuts and other assistance, they have faced limitations in reducing the impact of volatile energy markets.

Even with frugal, backyard chickens, they are wondering if the price of food is worth the price of their eggs. Alina Chernick, a shop assistant in Warsaw, calculates that the price of grain for her chicken has risen 150% to 200 zlotys ($ 45) per 100 kilograms (220 pounds).

It is spreading the idea of ​​vanity, especially for those whose income is low.

“I am a positive person, but for now, I can’t see the light at the end of the tunnel,” said Eva Fuchsova, a mother of three living in Tuskov, Czech Republic.

“I need to tighten my belt. I bought fruits and vegetables so my kids have everything, but I don’t touch it,” she said.

Economists are calling it a perfect storm, as countries have reported spending on economic recovery from the COVID-19 epidemic. Growing consumer demand has overwhelmed factories, ports and freight yards, causing deficits to drive up prices.

Add to that: Ukraine’s war has blocked exports of raw materials such as steel and minerals that have plagued Western Europe, as well as products such as grain and seed oil, which have exacerbated global deficits.

Inflation is particularly hot in Central and Eastern European countries near the battlefield in Ukraine. Prices rose 14.2% in April in the Czech Republic, 12.3% in Poland and 10.8% in Greece. They saw 61% of the eyeballs in Turkey, which saw its currency lose 44% of its value against the dollar last year.

Shopkeepers from Warsaw to Istanbul say customers are buying cheaper items, beautiful things like freshly cut flowers like new clothes and items they can delay.

In the Turkish capital, butcher Bayram Koza says he saw a 20% drop in sales after prices nearly doubled, mainly due to feed prices. This is making cattle breeding unprofitable and many farmers are selling and moving to the city, he said.

“Even in (the entire district) Cancakaya, people are no longer buying according to their needs, but according to their ability. Those who bought two kilograms of beef are now buying the most one kilogram,” he said.

On the Greek island of Rhodes, Paris Parasos, the owner of a fish restaurant, wakes up early in the morning to spend less on a fishing trip. But as the price of cooking oil quadrupled, he still had to raise the price of his restaurant in the island’s main city. Besides, cooking gas and electricity bills are three times higher.

“I could have reduced the quality and used more oil, but I refuse to do that. We want customers to come back and expect the same quality,” Parasos said.

In Poland, bread prices have risen by 30%, sending buyers to discount outlets. Unemployed in Belgium are laying off workers as the price of a loaf of bread rose 30 cents to 2.70 euros ($ 2.85).

“I know bakers who work 13 or 14 hours a day to get out of this and honor their debts,” Albert Densin, president of the French-speaking bakery federation, told La Premier Radio. “We can do it for a while, but when I hear from the World Bank management that it will last until 2024, we’re not going to do it.”

In Spain, truck drivers have received some relief in diesel prices thanks to government emergency measures, which include a small discount and allow consumers to pay higher fuel costs.

Yet the burden is much greater.

Banos, who runs his own cargo trailer from the central Spanish city of Palancia, said tires have risen from 400 to 500 euros, a new truck cab from 100,000 to 120,000 euros and a liter of diesel from 1.90 to 1.20. Euro last year. This is equivalent to one gallon of gasoline rising from $ 4.80 to 60 7.60.

“There’s a lot of uncertainty here, not just in our sector, but across the board,” Banos said.

European auto markets are also experiencing rising prices due to the closure of factories in Ukraine, sanctions on Russia, and a shortage of existing global semiconductor creams for car-making materials.

As a result, average new car prices in Europe are expected to rise from $ 500 to $ 2,000 this year, according to Nishant Mishra, associate director of investment research at Acuity Knowledge Partners.

Back in Milan, Roundabout was the only one of half a dozen non-EU-funded sites to shut down Ronzoni in recent months. He was unable to work at the contract price.

The high cost means companies are not bidding for public works, including a bridge in Rome that was the first project built with EU recovery funds. According to the NCS National Association of Construction Workers, with the suspension of bidding, almost half of the 20 220 billion euro allocated by the EU for infrastructure is at risk – along with the work it will bring.

The government has announced 3 billion euros to help cover the increased price, but for manufacturers it is not enough, the average cost is 40%, but sometimes much higher. Iron prices, for example, have risen 170%, Ranzoni says.

“It’s indicative,” he said.

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