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Thursday, September 29, 2022

Inflation breaks record in Eurozone: reaches 8.9%

LONDON ( Associated Press) – Inflation in EU countries that use the euro hit a record high in July, driven by rising energy prices caused by Russia’s war in Ukraine. Overall, the economy registered modest growth, but higher than expected.

Annual inflation in the eurozone, made up of 19 of the bloc’s 27 countries, rose to 8.9% in July from 8.6% the previous month, according to the latest data released Friday by the Community Statistics Agency.

Inflation is at its highest level since 1997, when records for the euro began. For this reason, last week the European Central Bank raised interest rates for the first time in 11 years and expressed hope of a new hike in September.

Fuel prices rose 39.7% in July, slightly lower than the previous month, on concerns about gas supplies. Food, alcohol and tobacco prices rose 9.8% over the previous month due to rising transportation costs, shortages and uncertainty about supplies from Ukraine.

“An ugly figure for inflation in July,” said Burt Collijn, senior eurozone economist at ING Bank. “There is no imminent sign of relief,” he said.

Meanwhile, despite stagnation in Germany, traditionally Europe’s economic engine, the eurozone economy grew 0.7% in the April-June quarter compared to the previous quarter. France shrugged off fears of a recession with a modest 0.5% increase, while Italy and Spain beat expectations with growth of 1% and 1.1%, respectively.

Economists highlighted a rebound in tourism following the COVID-19 pandemic, with travel chaos due to staff shortages at airports and airlines.

With inflation rising higher than forecast, analysts expect economic growth to be the last of the good news, as rising prices and interest rates, as well as a worsening energy crisis, are likely to propel a recession in the coming months.

“This will probably be the best that the eurozone can hope for for the foreseeable future,” Andrew Kenningham, chief Europe economist at Capital Economics, wrote in a research note.

World Nation News Desk
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