This drink, which was previously taken for granted, might soon become a pricey luxury if costs continue to rise. All throughout the world, inflation is placing strain on household finances. What the headline rate of price rises will mean for you, however, is difficult to predict. According to CNBC, headline inflation in all 19 euro-using nations reached 10.7% in October 2022, which was the highest level since the euro's inception. Energy prices, which increased by 41.9% on an annual basis in October, were the most important cause.
In October 2022, the cost of food, alcohol, and cigarettes increased annually by 13.1%, up from 11.8% the previous month. Inflation overall in October was 12.8%. CNBC reported rates of 7.1% in France and 11.6% in Germany for Italy. The majority of national inflation statistics are based on increases in the cost of a group of products and services, or "basket," that statisticians believe best represents what the average household could regularly purchase. Although this yields a national inflation rate, your own rate of inflation is determined by the items you actually purchase on a daily basis. Like many other authoritative sources, the UK Office of National Statistics has a calculator to assist you in determining your individual rate.
Experts have developed a few solutions to make headline inflation figures more understandable. The Mars Bar Standard, an inflation gauge based on how much money is needed to buy a chocolate bar, was first developed in 1981 by the late Financial Times journalist Nico Colchester. Based on the cost of the Big Mac hamburger and the chocolate Freddo bar, comparable indices have been developed. Now, statisticians in the European Union have developed a metric that is even more widely applicable: the cost of a cup of coffee.
According to data from Eurostat, the cost of a cup of coffee increased by nearly a fifth (16.9%) in the year leading up to August 2022. In contrast, coffee prices in the EU only climbed by 0.5% during the preceding 12 months. According to the European Commission, many people start each day with a cup of hot coffee. But recent price increases could turn this morning staple into a luxury. If you like your coffee with milk or sugar, the effects of inflation have been much more pronounced; in August 2022 across the EU, the cost of fresh whole milk was 24.3% higher than it was a year earlier, while the cost of low-fat milk was 22.2% higher.
With the EU price of sugar increasing by 33.4% over the same time period, adding sugar to your cup has become even more expensive. In comparison, between 2020 and 2021, sugar prices only rose by 0.8%. The highest increase in coffee prices was seen in Finland, where prices increased by over 44% in the year leading up to August 2022. In contrast, adding sugar to coffee in Poland now costs over 109% more. In Hungary and Lithuania, milk costs have increased by over 50%, which is a significant increase. The results of the September 2022 Chief Economists' Outlook from the World Economic Forum, which warned that our current economic situation is extremely dangerous, are mirrored by the European Coffee Index.
It said that since growth expectations are being reduced globally, inflation has risen to levels not seen in a generation. The research noted that "real wages and consumer confidence are in freefall, creating more growth obstacles and possibly heightening the possibility of social instability." The research said that the global economy is in "uncharted seas" and that efforts to control inflation run the risk of bringing on a recession and a rise in unemployment, while aid for poor people raises already high levels of public borrowing brought on by the pandemic.
More than 90% of the top worldwide economists surveyed for the report predicted that while inflationary pressures should ease in 2023, prices in Europe and the US will likely remain high through the rest of 2022. The research concluded, "The immediate picture for the global economy and for much of the world's population is bleak." The difficulties described in this study are overwhelming. They will put economic and social stability to the test and take a heavy toll on people.
