Eurozone inflation hits new high of 9.1% as food and energy prices soar

0

Inflation continues to hit new highs just as the European Central Bank is pricing in another big interest rate hike next month.

NurPhoto/Contributor/Getty Images

Eurozone inflation hit a new record in August of 9.1%, according to flash figures from European statistics office Eurostat, with high energy prices the main driver.

The rate was above expectations, with a Reuters poll of economists predicting a rate of 9%.

This is the ninth consecutive record for consumer price inflation in the region, with the rise beginning in November 2021. Headline inflation in the eurozone reached 8.9% (year-on-year) in July.

The French inflation rate fell to 6.5% in August, from 6.8% in July, it was announced on Wednesday. The rate is lower than expected, with Reuters economists having expected a decline to 6.7%.

Spain also released figures on inflation slowing in August, to 10.4% year-on-year from 10.8% in July, according to preliminary figures from the National Institute of Statistics.

Meanwhile, the region’s largest economy, Germany, saw inflation hit its highest level in nearly half a century at 8.8% year-on-year in August.

The ECB “has some catching up to do”

Inflation continues to hit new highs just as the European Central Bank is pricing in another big interest rate hike next month.

The ECB raised interest rates by 50 basis points to zero on July 21 – its first rate hike in 11 years – and a similar, if not bigger, hike is now expected on September 8.

“Some members are inclined to advocate a 75 basis point interest rate hike,” Peter Schaffrik, global macro strategist at RBC Capital Markets, told CNBC’s “Squawk Box Europe” on Wednesday.

“Despite the downturn in the economy that we will almost certainly experience, central banks will not let up on their way,” he said.

The outlook for the European economy is “pretty bleak,” Kenneth Wattret, head of economics at S&P Global Market Intelligence, told CNBC’s “Street Signs Europe” Aug. 23.

“It seems inevitable that the eurozone is heading into a recession. The question is only how deep it will be and how long it will last,” he said. The ECB “has some catching up to do”, according to the economist.

“The ECB is well behind the curve, inflation is exceptionally high and will likely remain so for at least the next seven months,” Wattret said.

French Finance Minister Bruno Le Maire told CNBC’s Charlotte Reed on Tuesday that inflation is a major concern for European nations in the near term. “The main challenge we all have to face for the next few weeks and months is to reduce the level of inflation everywhere in Europe,” said Le Maire.

“It is therefore up to the ECB to take the right decisions, and we fully trust the ECB to take the right decisions, but the main thing is to have a drop in the level of inflation everywhere in Europe”, a- he declared.

Share.

About Author

Comments are closed.