Brussels, 30/06/2008 (Agence Europe) - Addressing the European Parliament economic and monetary affairs committee on Monday 30 June, European Economic and Monetary Affairs Commissioner Joaquin Almunia said that he was deeply concerned about the economic and, especially, social consequences of inflation, which, with its rate of 4% in the month of June, was at its highest level since the single currency came into use. He said that it was clear that quarterly inflation figures would be higher than those forecast by the European Commission as, indeed, it appeared, would be the case for the whole of 2008, although inflation could possibly stabilise in the second half of the year. He repeated the factors which caused this inflation: the increase in the prices of energy products and raw materials, which were having an effect on consumer prices.
What could be done to remedy the situation? Almunia stressed that nothing that could lead to distortion had to be done. In the short term, targeted measures that had time limits imposed on them could be used to bring relief to the most disadvantaged sections of the population and sectors of activity, he added. Wage restraint was, he said, crucial, although pay increases linked to improved productivity might be possible. Responding to those MEPs who accused the Commission of lack of action over purchasing power, he set out what had already been done: the Common Agricultural Policy (CAP) “health check”, the energy-climate legislative package, the analysis of the retail goods distribution system, the dialogue with oil-producing countries, emergency aid to developing countries. As for financial speculation on crude oil prices, Almunia said that this heightened tensions, but did not cause them.
Did the euro really make us stronger, asked Portuguese MEP Elisa Ferreira (PES). Prices and interest rates had been lower than if there had been no Economic and Monetary Union (EMU), he said, pointing out that there would not make sense to accuse the euro of the increases in oil and raw materials. Speaking about the recent Commission communication on the 10 years of the EMU, he said he hoped the Ecofin Council would debate the issue in October. He recommended better operation of the EMU notably by giving its economic sector real content, without altering the rules of the treaty or putting new procedures in place. (M.B./transl.rt)