Inflation in the euro zone remains extremely high. Protesters in Italy used empty shopping carts to demonstrate the cost of living crisis.
Stefano Montesi-Corbis | Corbis News | Getty Images
Eurozone inflation topped 10% in October, underscoring the severity of the region’s cost of living crisis and adding further pressure on the European Central Bank.
Preliminary data released by the European Statistical Office on Monday showed that headline inflation rose to 10.7% year on year last month. This is the highest monthly reading on record since the formation of the Eurozone. The 19-member bloc has faced higher prices, especially on energy and food, over the past 12 months. But the increases were accentuated by Russia’s invasion of Ukraine in late February.
This proved to be the case once again, with energy costs expected to have seen the largest annual increase in October, at 41.9% versus 40.7% in September. Food, alcohol and tobacco prices also rose over the same period, jumping 13.1% from 11.8% the previous month.
Monday’s data comes after individual countries released flash estimates last week. In Italy, headline inflation is above analysts’ expectations at 12.8% year-on-year. Germany also said inflation jumped to 11.6% and in France the figure reached 7.1%. The different values reflect the measures taken by national governments, as well as the level of dependence that these countries have, or had, on Russian hydrocarbons.
However, there are countries in the euro zone where inflation has increased by more than 20%. This includes Estonia, Latvia and Lithuania.
The European Central Bank – whose main objective is to control inflation – on Thursday confirmed further rate hikes in the coming months in a bid to lower prices. He said in a statement that he had made “substantial progress” in normalizing rates in the region, but that he “plans to raise interest rates further, to ensure that inflation returns quickly to its medium-term inflation target of 2%”.
The ECB decided to raise rates by 75 basis points for the second time in a row last week.
Speaking at a subsequent press conference, ECB President Christine Lagarde said the likelihood of a eurozone recession had intensified.
Growth figures released on Monday showed a GDP (gross domestic product) figure of 0.2% for the eurozone in October. This is after the region saw growth of 0.8% in the second quarter. Only Belgium, Latvia and Austria recorded GDP rates below zero.
So far, the 19-member bloc has dodged a recession, but an economic downturn is evident. Several economists predict that there will be a contraction in GDP in the current quarter.
The euro traded below parity with the U.S. dollar at the start of European trading hours on Monday and ahead of new data releases, and barely budged after the new numbers. The euro has been weaker against the greenback and this is also something the ECB is concerned about, fearing that it will further increase inflation in the eurozone.