Are Central Banks behind the curve?

Henri Kouam
7 min readJun 17, 2022


Inflation is running hot and central banks are having a time convincing stressed consumers that prices are under control. The war in Ukraine and Russian inflation premium are beginning to bite and the question is whether central banks are behind the curve. Inflation is high and will likely eat into consumers’ bargaining power. This could have a double impact on growth that is being slowed by Russia’s illegal war in Ukraine. Inflation is high across the EU, section one will look at how inflation has progressed in Europe’s largest three economies since the invasion in Ukraine began, including in Switzerland. Section two will look at the impact of higher inflation on retail sales and domestic consumption. Section three will look at the pace at which central banks are tightening monetary policy and Section four will look at the implications of higher interest rates on EU banks.


Inflation is the highest it’s been for a decade and why do you care? For most people, it is a slight inconvenience that reflects one less drink, one fewer holiday, and fewer trips to see friends. To others, it’s the death nail in the ear of slow wage growth, rising property and rent costs, and falling disposable incomes. This is especially for the working class which is subject to exorbitant health care premiums in the U.S and less accommodative social policy in some European countries. But let’s come back to the topic of inflation, lest I digress.

Section 1: Inflation in Germany, France, Italy and Switzerland

Inflation has been rising in Europe and Euro area annual inflation is expected to be 8.1% in May 2022, up from 7.4% in April according to Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in May (39.2%, compared with 37.5% in April), followed by food, alcohol & tobacco (7.5%, compared with 6.3% in April), non-energy industrial goods (4.2%, compared with 3.8% in April) and services (3.5%, compared with 3.3% in April).

In Germany, France, and Italy, prices rose by 8.7%, 5.8%, and 7.3% (to be confirmed) from 7.8%, 5.4%, and 6.3% respectively. By looking at the monthly outcomes since January 2022, it is clear that prices rose the most in…

Henri Kouam

I am an economist and contributor to Nkafu policy, a think tank. I cover global economic, fiscal and monetary policy with policy and asset price implications.