Inflation reached a new high in the 19 countries using the euro, led by some uncontrolled natural gas prices and the electricity due to the war in Ukraine.
economic growth also slowed down sooner than economists fear an ongoing recession, largely due to those higher prices that reduce the spending power of Europeans.
Annual inflation hit 10.7% in October, European Union statistics agency Eurostat said Monday. This is an increase from 9.9% in September and the highest figure since eurozone statistics began to be compiled. in 1997.
The price of natural gas has skyrocketed after the invasion of Ukraine, as Russia has drastically reduced the supply in its pipelines. Europe had to resort expensive shipments of liquefied gasarriving by ship from the United States and Qatar to generate electricity and heat homes.
Even if the liquefied gas has covered reservations for the winterits high price has made some industrial products such as steel or fertilizers more expensive, or even made their production not be profitable. Consumer spending power has decreased as people spend more of their income to pay for fuel and utility bills of supplies.
The price of short-term purchases of natural gas has fallen in recent times, but remains high in the markets for the next few months, suggesting that expensive energy could be a persistent drag on the economy.
A survey of expert forecasts carried out by the European Central Bank indicated that inflation expectations for the next year have risen from 3.6% to 5.8%.
an international phenomenon
The rise in inflation was an international phenomenon which also raised prices in the US to nearly 40-year highs.
Eurostat data showed that food, alcohol and tobacco prices joined energy as big engines, with an increase of 13.1%, while energy prices grew by a sizable 41.9%.
The economy, which was recovering from the COVID-19 pandemic, grew 0.2% in the July-September quarter, compared to 0.8% in the second quarter. Economists point to rising prices as one of the reasons, with many predicting the economy it will contract in the last months of the year and the first of the next.
Rising inflation It shook the whole economy.
The phenomenon led the European Central Bank to raise interest rates at the fastest pace in its history, with two three-quarter point hikes in its meetings on 27 October and 8 September.
That has increased cost of debt for companies and governments and it has fueled fears that the war on inflation will harm growth.
Meanwhile, rising sovereign debt costs continue to cause concern heavily indebted countries of the euro zone, such as Italy.
The author is an Associated Press reporter
ap
Source: Clarin
