Eurozone inflation drops to two-year low, but Europeans are still feeling the pinch

Europeans have been overwhelmed by the impact of inflation over the past 12 months. The European Commission's Autumn Forecast, published in November, indicates that although the clouds appear to be clearing and inflation has dropped below 3%, growth is looking stubbornly low.

In this episode of Real Economy, we ask if businesses and consumers are really seeing a drop in prices, and look ahead to how Europe's economic growth will evolve in the coming months. 

In Belgium, annual inflation is among the lowest in the eurozone. The price of energy, transportation, and certain raw materials has stabilised in recent months. However, many customers and businesses are not seeing a decrease in food prices.

"Whether it's in fruits and vegetables, especially in strong products like bananas, mushrooms, or tomatoes, there has been an increase of more or less 30%," explained  Yacin Malkoc, the manager of a Belgian grocery store.

"In the past, fruits and vegetables were accessible to all budgets, but today, there is a significant decrease in clientele due to the increased prices."

In Europe, the price of food continued to increase in 2023. For instance, over two years, there has been a rise of 37% for eggs, 53% for potatoes, and 75% for olive oil.

However, in recent months, these prices have increased less rapidly. So as the anti-inflation measures of European countries come to an end, will companies and households feel the difference in their wallets?

"According to our estimates, the increase in wages will catch up with inflation. And of course, this will contribute to the purchasing power, this will increase consumption and the increase of consumption is the premise to restart growth. So there is a little bit of moderate optimism looking to