Inflation in Europe stays low but currency exchange rates have expats worried

Published:  19 Jul at 6 PM
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Expats living in Europe are seeing low cost of living increases.

Expatriates living and working in the European Union are facing an average cost of living increase of 1.6 per cent in both May and June this year. According to the European Central Bank, it’s targeting an increase of just below two per cent, with European parliament members now saying they’re ready to support increasing inflation by means of raising interest rates.

Those living in Romania have seen the highest inflation at 3.9 per cent, with Hungary coming in on 3.4 per cent and Latvia at 3.1 per cent, all rises high enough to affect expats living on home county pensions. Expats living, working or retiring in Greece got the best deal, as inflation at 0.2 per cent was recorded and is unlikely to cause hardship even to British pensioners on the UK’s none-too generous state pension. Brits in Cyprus were almost as lucky, with a 0.3 per cent increase, and expats in Croatia and Denmark breathed a collective sigh of relief at their 0.5 per cent rate.

Looking at EU member states in general, 17 saw their costs of living fall, with one country’s rate staying the same and nine seeing increases. For expats living and working in Europe, it’s the currency exchange rate rather than the rate of inflation which is causing concern. In these unstable political times, those receiving pensions, investment income or rental payments made in their home countries’ currencies are mostly losing out, whilst those in paid work are more secure. It’s certain that Brexit will cause more chaos in the markets and on the high street before it finally grinds to its conclusion, giving yet more reason to worry over inflation and exchange rates.
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