EU news monthly: Annual inflation was 2.4% in August 2024

Erste Bank Research Team Erste Bank

Politics

The president of the European Commission, Ursula von der Leyen, has presented a list of candidates for the Commission and established their portfolios in accord with the aims of her political guidelines. The commissioner nominees will next appear at a public hearing in the European Parliament. After that, the Parliament will vote its consent to the entire commission at once. The European Council, acting by qualified majority vote, will then affirm the new leadership of the Commission.

The populist right-wing party FPÖ has won parliamentary elections in Austria for the first time. It is the party’s first ever victory in elections to the National Council, the lower house of the Austrian parliament. The question now is whether the party will be able to form a government.

French president Emmanuel Macron has presented a new government for France, and tens of thousands of demonstrators are already protesting it. It is not clear how long the new government led by Prime Minister Michel Barnier can hold on. The government is threatened by the refusal of both leftists and the far right to give it a vote of confidence.

As expected, on September 12 the Board of Governors of the European Central Bank reduced its deposit facility rate by a quarter of a percentage point to 3.5 percent. The ECB also reduced the interest rate on main financing operations by 0.6 of a percentage point to 3.65 percent.

Economy

In the second quarter of 2024, the EU seasonally adjusted current account of the balance of payments recorded a surplus of €130.4 billion (+2.9% of GDP), compared with a surplus of €132.4 billion (+3.0% of GDP) in the first quarter of 2024 and a surplus of €78.1 billion (+1.8% of GDP) in the second quarter of 2023.

In the second quarter of 2024, house prices, as measured by the House Price Index, increased by 2.9% in the EU compared with the same quarter of the previous year. In the first quarter of 2024, house prices rose by 1.5% in the EU. The largest falls were registered in Luxembourg (-8.3%) and Finland (-4.8%), while the highest increases were recorded in Poland (+17.7%) and Bulgaria (+15.1%).

The EU unemployment rate was 5.9% in August 2024, down from 6.0% in July 2024 as well as in August 2023.

EU annual inflation was 2.4% in August 2024, down from 2.8% in July. A year earlier, the rate was 5.9%. The lowest annual rates were registered in Lithuania (0.8%), and Latvia (0.9%). The highest annual rates were recorded in Romania (5.3%) and Belgium (4.3%). Compared with July 2024, annual inflation fell in twenty Member States, remained stable in one and rose in six.

In the second quarter of 2024 the hourly labour costs rose by 5.2% in the EU, compared with the same quarter of the previous year. The highest increases in hourly wage costs for the whole economy were recorded in Croatia (+17.6%), Bulgaria (+15.4%) and Romania (+15.0%).

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Erste Bank Research Team

Erste Bank

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