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Europe suffers insufferable economy as ECB increases interest rates

EU Cost of Living crisis

EU residents, particularly Italians, are struggling to pay for food and other amenities with many saying their standard of living has fallen drastically due to the increased interest rates by the European Central Bank.

The recent decision by the European Central Bank to raise interest rates by a further 0.5% has thrown Italian families as well as small and medium entrepreneurs into the depths of gloom.

Prices in Italy rose 8.1% year on year in 2022, hitting a 37 year high. Now, Italians see themselves stuck between a rock and a hard place. The country's inflation rate had shot up to around 12% in the months between October and December, a trend also seen across Europe.

This is due to soaring energy and food prices linked primarily to the conflict in Ukraine and the related rearmament spending that all members of the bloc are engaged in.

High inflation, soaring energy bills are biting hard. In addition to that, average salaries have not kept up pace and they have not gone up for years. It's really worrying.

Member of Public 01

But it's also caused by the government having thrown support packages worth hundreds of billions of Euros at the corporations and the rich over the past years.

Quite simply, I went to buy food at the supermarkets last week and the items I usually buy for 30 years cost me about 50 Euros instead.

Member of Public 02

Although inflation rates have recorded a clear abatement across Europe, Italy is still dealing with double digit inflation, which stands at over 10%.

The European Central Bank's latest rate hike has brought to 3% the total of interest rate increases over the past six months. The EU's Governing Council is expected to raise them further next month.

Reserves by the ECB adopted to slow inflation don't seem to have worked very much so far. The problems affecting our economy seem to be rather structural and this situation has led citizens aren't businesses to lose confidence in a real recovery.

Mehdi El Nemr, Journalist

According to a survey of some 27,000 citizens, commissioned by the European Parliament, more than nine out of 10 Europeans are very concerned about the rising cost of living.

40% of the people living in the EU feel they are already struggling to pay for food and other basics with almost one in two saying their standard of living has fallen.

But more worryingly they are not holding out much hope for the future either with 39% saying that that they expect the standard of living shall fall even more this year.

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