‘I can’t see the sunshine’: Struggle fuels surging costs in Europe

Edoardo Ronzoni inspects a development website close to Milan that he shut down in March as prices for supplies skyrocketed. He can’t full a half-built roundabout at an intersection recognized for fender-benders as a result of asphalt, cast-iron pipes and concrete are too costly — costs exacerbated by Russia’s warfare in Ukraine.

Public works initiatives in Italy are grinding to a halt simply because the European Union is injecting 108 billion euros ($114 billion) in pandemic restoration cash meant to launch a development frenzy.

Ronzoni laments that his firm has already misplaced its three busiest months and expects the worst is forward: “We fear we won’t be able to work this year. We are closing all of our sites.’’

The war has accelerated inflation across Europe and the world, with prices for energy, materials and food surging at rates not seen for decades. It’s causing sticker shock at the grocery store, gas pumps, electricity bills and construction sites.

Soaring oil and gas prices are the key driver of inflation in Europe, which is heavily reliant on Russian energy to generate electricity and power industry. Inflation is expected to hit nearly 7% this year in the 27-nation EU and is contributing to slowing growth forecasts.

Fishmongers and farmers are being forced to charge prices for their catch and crops that even they see as astronomical. High fuel prices threaten to paralyze ground transport of goods. Bread prices are soaring from Poland to Belgium. Protests over price hikes have erupted in places like Bulgaria. While governments have responded with tax cuts and other aid, they face limits in easing the impact of volatile energy markets.

Even the thrifty, with backyard hens, are wondering if the price of feed is worth the eggs they yield. Alina Czernik, a shop assistant in Warsaw, does the math, as she sees prices of grain for her hen go up 150%, to 200 zlotys ($45) per 100 kilograms (220 pounds).

It is spreading a sense of futility, especially for those with low incomes.

“I’ve been a positive person, but for now, I can’t see the light at the end of the tunnel,” stated Eva Fuchsova, a mom of three who lives within the city of Touskov in western Czech Republic.

“I have to tighten my belt. I buy fruits and vegetables so my kids have everything, but I don’t touch it,” she stated.

Economists are calling it an ideal storm, hanging as international locations unleashed spending to spur an financial rebound from the COVID-19 pandemic. Surging buyer demand overwhelmed factories, ports and freight yards, with ensuing shortages driving up costs.

Add to that: The warfare in Ukraine has blocked exports of uncooked supplies like metal and minerals that saved western Europe buzzing, in addition to commodities like grains and seed oil, accentuating world shortages.

Inflation is operating particularly scorching in central and Eastern European international locations nearest the battlefields of Ukraine. Prices in April rose 14.2% within the Czech Republic, 12.3% in Poland and 10.8% in Greece. They’re an eye-popping 61% in Turkey, which noticed its forex lose 44% of its worth in opposition to the greenback final yr.

Shop employees from Warsaw to Istanbul say prospects are reducing again, shopping for lower-priced gadgets, giving up on niceties like fresh-cut flowers and gadgets they will delay, like new garments.

In the Turkish capital, butcher Bayram Koza stated he has seen a 20% drop in gross sales after costs almost doubled, largely as a result of the price of feed. That is making livestock breeding unprofitable, and lots of farmers are promoting and shifting to the town, he stated.

“Even in (the affluent district of) Cankyaya, people are no longer buying according to their needs, but according to what they can afford. Those who bought two kilos of ground beef are now buying a kilo at the most,’’ he said.

On the Greek island of Rhodes, fish restaurant owner Paris Parasos gets up at dawn to go out on fishing trips to keep costs down. But he has still had to raise prices at his restaurant in the island’s main town as cooking oil prices quadrupled. Plus, cooking gas and electricity bills are three times higher.

“I could lower the quality and use the oil more, but I refuse to do it. We want customers to return and expect the same quality,” Parasos stated.

In Poland, bread costs are up 30%, sending customers to low cost shops. Bakers in Belgium are laying off workers, as prices for a loaf rise by 30 cents, to 2.70 euros ($2.85).

“I know bakers who work 13 or 14 hours a day to get out of this and honor their loans,” Albert Denoncin, president of the French-speaking bakery federation, told La Premiere radio. “We can do it for a while, but when I hear from the World Bank management that this will last until 2024, we are not going to make it.”

In Spain, truckers have gotten some relief on diesel prices thanks to government emergency measures, including a small rebate and permission to pass along higher fuel costs to customers.

Still, the burden is high. Óscar Baños, who drives his own cargo trailer out of the central Spanish town of Palencia, said tires have risen from 400 to 500 euros, a new truck cab is up from 100,000 to 120,000 euros, and a liter of diesel has risen from 1.20 to 1.90 euros in the past year. That’s the equivalent of a gallon of gasoline rising from $4.80 to $7.60.

“There is a lot of uncertainty, not just in our sector but across the board,” Baños said.

Europe’s auto market also is facing price hikes as factory shutdowns in Ukraine, sanctions on Russia and an existing global semiconductor shortage crimp supplies of components needed to make cars.

As a result, average new car prices in Europe are expected to rise $500 to $2,000 this year, according to Nishant Mishra, associate director of investment research at Acuity Knowledge Partners.

Back in Milan, the roundabout is just one of half a dozen sites Ronzoni has had to close in recent months. He finds himself unable to deliver the work at the contracted prices.

High costs mean companies are not bidding to take on public works, including a bridge in Rome that was to be the first project built with EU recovery funds. The money earmarked for infrastructure, worth nearly half of the 220 billion euros from the EU, is at risk — along with the jobs it would bring, according to ANCE National Association of Construction Workers.

The government has announced 3 billion euros to help cover increased prices, but builders it’s not sufficient, with costs up an average of 40%, but sometimes much higher. Iron prices, for example, are up 170%, Ronzoni said.

“It’s exponential,” he stated.


AP reporters Suzan Fraser in Ankara, Turkey; Monika Scislowska in Warsaw, Poland; Joseph Wilson in Barcelona, Spain; Derek Gatopoulos in Athens; Karel Janicek in Prague; Kelvin Chan in London; Paul Wiseman in Washington; Samuel Petrequin in Brussels; and Veselin Toshkov in Sofia, Bulgaria, contributed.

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