Figures published today by Eurostat say year-on-year inflation in the Eurozone in September was 3.4%, a 13-year high, mainly driven by energy prices. Inflation in Germany, the largest Eurozone economy, is even higher, at 4.3%. The Eurozone is comprised of the 19 EU countries that use the single currency.
Given the continued rising prices in energy and other commodities, combined with the impact of the price of CO2, expectations are that inflation will continue rising in the coming months.
A financial statement published for the first time by the largest independent trader in liquefied natural gas (LNG), the Geneva-based Gunvor, shows that gas prices are driven by financial speculation. Gunvor trading surged 28% in the first semester, compared to last year.
“The figures suggest big commodity traders—a group that also includes Vitol, Trafigura, Glencore and Mercuria—are well-positioned to take advantage of the supply crunch that has gripped energy markets and sent gas prices to record highs,” the Financial Times reported Sept. 29.
At the same time, financial speculation is driving CO2 prices. Carbon Emissions Trade are objects of futures trading, i.e., side bets on the projected income flow from a de facto tax (so-called “dirty” industries pay such a tax as they are forced to buy carbon emissions certificates).
All in all, the hyperinflation of energy and other commodity prices proves Lyndon LaRouche’s forecast that at a certain point, asset-price inflation would spill over from the financial to the real economy, to consumer prices.
Ignoring this reality, ECB President Christine Lagarde stuck to the “party line” Sept. 28, saying that “what we are seeing now is mostly a phase of temporary inflation linked to reopening,” in a speech in Frankfurt. “So, we still need an accommodative monetary policy stance to exit the pandemic safely and bring inflation sustainably back to 2%” (sic).
In his remarks in the Senate hearing the same day, Federal Reserve System Chairman Jerome Powell has instead stretched the duration for “temporary” inflation into next year, according to excerpts of his remarks published by CNBC. “And it’s also frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margin apparently getting a little bit worse,” Powell said. “We see that continuing into next year probably, and holding up inflation longer than we had thought.”
