KORTRIJK, BELGIUM — Shortly after he was appointed Belgium's economy minister this spring, Vincent van Quickenborne ordered an inquiry into the price of frites. Invented in Belgium but known to the world as French fries, these crispy national favorites had jumped in price by 4% over the prior year -- despite a 24% drop in the price of potatoes.
Suppliers immediately blamed the rocketing cost of energy and rent. Minister Van Quickenborne quipped that the price of fries just might be chasing the price of a barrel of oil. (Not that they're cooked in such grease.)
In all seriousness, the minister made it clear that, through his inquiry, he was chasing a much larger problem affecting not only Belgium but much of Europe: inflation.
With the United States hovering on the brink of recession and the Federal Reserve deciding that slow growth is a bigger threat than inflation -- even with higher fuel and food costs -- Europe remains strong.
Euro-zone economies grew 0.7% in the first quarter compared to a year earlier, while the U.S. eked out 0.1% in the same period. Leading the way was Germany, Europe's largest economy and biggest exporter, with a 1.5% expansion. But even France, which has been plagued by stagnation and social unrest, did moderately better than expected with 0.6% growth. Such figures have affirmed the European Central Bank's steadfast refusal to follow the Fed in lowering interest rates, which can fuel inflation.
But the European public is fretting about rising prices. In Belgium, inflation hit 4.9% in March compared to a year earlier, its highest rate since 1985 and the steepest in the 15-country euro zone, where the average was 3.4%, according to Eurostat, a statistical agency. (U.S. consumer prices were up 4% in March over the previous year.)
The reasons for steady European growth and persistent inflation can be found here in Kortrijk, a flourishing city of 80,000 in Belgium's Flanders region, not far from the French border, that has been modernizing in a powerful way.
Historically, the city relied on the textile industry and sold much of its wares in Europe. But in the last decade, many of its companies turned from making flax, steel and other commodities to high-tech specialty products. They also reduced their reliance on the United States and Western Europe, focusing more on Eastern Europe, Asia and Latin America.
