Why is everything so expensive?

In 2022 everything suddenly became very expensive. Food, electricity and heating cost much more money than before. In the eurozone inflation was over ten per cent at the time. Inflation means that prices rise and money is worth less.

First, the Covid pandemic came in 2020. Many factories and ports did not work normally for a long time. That is why there were not enough goods in the shops. In February 2022 the war in Ukraine began. The prices of gas and oil became very high.

Central banks must keep prices stable. Their goal is inflation of about two per cent a year. When prices rise too much, they raise interest rates. Then loans are more expensive and people buy less.

In 2022 and 2023 central banks raised interest rates sharply. Today inflation in the eurozone is again around two per cent.