Inflation in Germany finished April at 7.4% and preliminary Destatis data indicate a rate near 8% in May. Early signs pointed to fuel and energy costs driving the rise, and this pressure has spread to staple foods such as bread, oil, butter, and meat. Destatis notes that food prices climbed by more than 11% in the previous month, signaling a persistent upward trend.
The inflation surge followed the relaxation of pandemic restrictions and was intensified by the war in Ukraine. What began as a temporary spike, viewed by the federal government and many economists as transitional, is now raising concerns about inflation becoming entrenched and potentially weighing on employment.
The federal government initiated a study and announced a 22.0 billion euro package to mitigate rising prices. The package includes measures such as reduced fares and discounts on public transport, with a nationwide option of nine euro per month for access to services.
France: containment in ascension
Inflation in France sits above 5% in May, higher than some neighbors but lower than others. The latest data from INSEE show an overall price increase of 5.2%, while the European Union statistics office reports 5.8% using a slightly different methodology. Like most European economies, France contends with the impact of the Ukraine conflict and elevated energy prices. OECD estimates suggest French GDP growth may slow to around 2.36% by year end, compared with a prior forecast near 4.19%.
Despite these pressures, France has inflation lower than most EU members, with only Malta recording a smaller rise. A less pronounced energy price increase than in several peers helps explain the relative restraint. Electricity bills benefited in part from state energy policy and EDF’s influence, which kept the cost to households more contained than elsewhere in the euro area. Energy costs have nonetheless risen, reflecting a broad European trend.
UK: ahead in all spending
British households are grappling with sustained price increases while wages lag behind. Food, fuel, electricity, daily coffee, and evening pints have all grown more expensive. Inflation sits around 9%, the highest in four decades, with Bank of England officials warning it may hit new highs before the year ends. The household shopping basket rose 3.5% in April and 4.3% in May, marking the most significant leap in a decade. The root causes lie in rising materials costs, energy, and transportation.
Food safety data highlight concerns about budget stress, with a large share of Britons prioritizing essential purchases. Surveys indicate that many households cut meals or portions when money runs tight, and consumer spending on nonessential items has declined accordingly. Petrol and diesel prices are up, and the housing market remains tight as mortgage and rent costs edge higher in many regions.
Italy: growth falters and prices rise
Italy experiences ongoing inflation alongside slower GDP growth. ISTAT reports that inflation climbed through the first half of the year, with year-over-year rises of around 5.7% in the early months, rising to about 6% and then nearly 6.9% into May. Increases are driven by energy products, food, and entertainment and personal care services. Despite the price pressures, ISTAT projects that overall inflation for the year will hover near 5.8%, with GDP growth near 2.8% but slightly under prior government projections.
Regional variation remains pronounced, with the northern cities often bearing the largest increases. Higher local costs translate into greater annual household expenditures, creating financial strain across multiple provinces. The uneven spread of inflation across the country is a notable feature of the current economic landscape.
Portugal: a look back at three decades
INE data show May inflation around 8%, the highest in 29 years and modestly above April. This figure aligns with the euro area average of about 8.1% according to Eurostat estimates published recently. The government points to the war in Ukraine as a driving factor and signals a cautious outlook for inflation relief measures. Economy Minister António Costa Silva has discussed possible reviews of policies such as fuel tax reductions and price caps on gas in coordination with EU partners.
At the same time, some policymakers resist broad calls for immediate, large-scale increases in pensions or public-sector wages, arguing that such steps could feed into a renewed inflationary cycle. The coming weeks are expected to reveal whether targeted relief will be sufficient to stabilize price pressures without fueling broader price gains.
Across these European economies, inflation remains a defining challenge as energy costs, food prices, and transport expenses continue to influence household budgets. Analysts note that policy responses, while varied, aim to cushion consumers without letting inflation expectations take hold—an equilibrium that will shape economic performance through the rest of the year.