The inflation boom worries finance officials more than the Omicron variant

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Inflation has reached record levels, the result of the increasingly unequal “recovery.” In November, in Europe, it reached levels never seen since the birth of the euro; in Italy as well, it has now risen to the highest levels of the last 13 years. The data on the so-called “high cost of living” is directly reflected in the increase in energy bills that is worrying the government, which has already allocated more than €4 billion to “neutralize” the dreaded increases that have been announced, which raised general alarm on Monday among the extra-large Draghi majority.

The “cost of living” throughout Europe has risen by an incredible (until a few months ago) 4.9%, and, according to Eurostat, this has surpassed a record never seen since the euro came into existence and historical data began to be collected. It was similar in Italy, where preliminary estimates from ISTAT revealed an increase in the cost of living of 3.8% over the same time last year. It was 3% in October, which itself was the highest level since September 2008, 13 years ago.

To get a clearer idea: in just one month, prices increased by 0.7%. As a trend, energy prices rose from +24.9% year-over-year in October to +30.7%. Most importantly, the unregulated component grew (from +15.0% to +24.3%), while the regulated component slowed down in growth, deviating from the norm of recent years (from +42.3% to +41.8%). In October, the prices of processed foodstuffs (up 1.0% to 1.7%) and unprocessed foodstuffs (up 0.8% to 1.5%) and transport services (up 2.4% to 3.6%) also rose to a lesser extent. However, “core” inflation, i.e. excluding energy and fresh foodstuffs, and inflation excluding energy alone were both accelerating: from +1.1% in October to +1.4% year-over-year.

What do all these percentages add up to? On Monday, the UNC made another estimate: it all amounts to €1,346 of extra spending for a family with two children, including €524 for housing and €567 for transport.

This is the double face of the “growth” that is reaching record levels with the rebound after a resounding collapse due to quarantine, but which is eroding the purchasing power of wages already eaten up by previous crises and the deliberate intention to keep them low as the rule of a post-Fordist globalized economy, inspired by the idea of supply-side economics. This means lowering taxes (for the ruling classes and the “upper middle class,” as Draghi is doing with the IRPEF tax), decreasing regulation, mass precariousness, very low wages. All in favor of companies, of revenue. The “good debt” that Draghi is talking about is likely to follow this historical trend.

Across the ocean, this structural data of the crisis is being interpreted differently by the Federal Reserve, the powerful U.S. central bank. According to its president Jerome Powell, inflation is no longer a temporary phenomenon, as the EU commission and the European Central Bank (ECB), which has the mandate to keep it below 2%, claimed on Monday.

“We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation … I think it’s probably a good time to retire that word,” said Powell. In the U.S., the inflation rate was at 6.2% in October, a 30-year record.

More than the Omicron variant, this dilemma is causing concern in the context of the capitalist crisis. If the Fed decreases its monetary stimulus (“tapering”), the ECB may do the same, destabilizing the most politically compromised economy, namely that of Italy. There is no current intention to do this in Frankfurt and Brussels. According to them, inflation is temporary and we must be patient. While paying a high price.

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Originally published at https://ilmanifesto.it/piu-della-variante-omicron-preoccupa-il-boom-inflazione-momentaneo-o-duraturo/ on 2021-12-01