Euro zone citizens have 1 trillion euros in pandemic-era savings. Unlike US peers, they are unlikely to splash out in malls and restaurants. That’s bad news for retailers and service providers, but it may help the ECB cool inflation, writes guerreraf72
The flip side, though, has been stubborn inflation, especially in the services sector. Prices for services excluding energyat an annualised 6.8% in April, a major reason why overall inflation – at 4.9% – remains well above the U.S. Federal Reserve’s 2% target.
Secondly, there has been an ongoing war at the continent’s borders. That’s added the continued risk of another energy crisis. High consumer prices and tightening credit conditions also suggest Europeans will keep their money in their pockets.
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Stingy European savers will help the ECB, not LVMHEuro zone citizens have 1 trln euros in pandemic-era savings. Unlike their US peers, they are unlikely to splash the cash in malls and restaurants. That’s bad news for retailers and service providers, but it will help Frankfurt’s rate-setters slow the economy and cool inflation.
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