Inflation, COVID Harming EU Consumer Confidence 

Inflation and a rise in new COVID-19 cases has led to a drop in consumer confidence in the European Union, the European Commission reported Monday (Nov. 29). 

The commission’s sentiment index for November fell to 117.5, down fro 118.6 in October. 

That was the lowest level in seven months, an indication of consumers’ sour outlook on their current and future financial condition, their ability to make big purchases and their feelings about the economy in general. 

Read more: Rising Inflation Lowers Consumer Confidence 

Those findings mirrored feelings in the U.S.

As PYMNTS reported last week, consumer sentiment reached its lowest point in decades, thanks to a rise in inflation and decreasing standards of living.

Increasing costs for everything — from food, shelter, new vehicles, transportation, clothing and medical care — hit their highest levels since 1990. Gasoline saw the largest spike at close to 50%, while other energy costs rose 30%, compared to a little under 25% in September. 

In the EU, inflation climbed above 4% this month, putting a strain on household finances. Although the European Central Bank thinks this spike will be fleeting, executive board member Isabel Schnabel says there is a growing threat that price pressures might stick around.  

Read more: Rising COVID Cases Hampering Europe’s Recovery  

And then there’s the coronavirus. Even before news about the new omicron variant emerged, a rise in new cases had countries including Germany and the Netherlands imposing new restrictions, and the nations of Austria and Slovakia going into lockdown. 

Economists have said these restrictions and the rise of new COVID-19 cases could hamper the EU’s ability to recover from the virus. 

“We are expecting a bumpy winter season,” Stefan Kooths, a research director of the Kiel Institute for the World Economy in Germany, said last week. “The pandemic now seems to be affecting the economy more negatively than we originally thought.”