Reuters :
In the weeks that followed Russia’s invasion of Ukraine, western Europe’s big economies began to falter. But further east it was still boom-time thanks to double-digit wage hikes and generous state handouts in some countries.
A sharp slowdown in retail sales and plunging confidence indicators show that the cost of living crisis has caught up with Europe’s eastern wing, where people now face a harsh reality check as stubborn double-digit inflation erodes their incomes while food price rises top 15 per cent-22 per cent and energy costs soar.
As household consumption takes a hit, analysts are downgrading their GDP forecasts and the risk of a Europe-wide recession looms.
Families have started to tighten their belts. Poles are taking shorter holidays, Czechs are saving on restaurant bills while some seek second jobs, and in Hungary – where food inflation alone was an annual 22.1 per cent in June – people are cutting down on grocery bills and purchases of consumer durables as a slide in the forint currency pushes up import prices.
“I went into the bakery one day and a loaf of bread cost 550 forints. I go in the next day and it costs 650. For God’s sake!”, exclaimed Lajos, a 73-year-old man shopping at a market in the northern city of Esztergom on the Danube river.
