Harbingers of actual hyperinflation are appearing across Europe, most prominently in the U.K. and in Eastern Europe, and the U.S. dollar’s march higher is sinking currencies all over the world, exporting inflation manufactured by the Federal Reserve and the U.S. economy.
Following the recent Bank of England forecast of annual inflation higher than 13% at the end of this year in the U.K., analysts at Citigroup have left that forecast in the dust; its chief U.K. economist foresaw 18.6% inflation by year-end; inflation to “peak” well over 20% in early 2023 – the current Estonian level; and that the average retail prices for energy in the U.K. would triple from now until April 2023. At the speculative market in Brussels, the one-year future electricity price went to just under $750/MWh, or 75 cents/KWh; if this price were actually to become current, lights and power would be off all over Europe.
The latest major strike, caused by inflation, has started at the U.K.’s most important port, Felixstowe, which handles one-third of all U.K. port freight traffic. Dockworkers turned down an 8% wage increase offer—not surprising. The eight-day strike of 2,000 dockworkers will now cause further inflation pressure, as it will create a backlog, estimated to take 24 days to clear. There is also a loose “movement” of pledges not to pay electric bills, although its extent can’t be determined thus far.
In Germany, Bundesbank President Joachim Nagel said in an interview with Rheinische Post that Germany consumer inflation is likely to exceed 10% in the fall—one month away—and “inflation will not go away in 2023.”
