Inflation is showing no signs of respite in the European Union as price inflation in Eurozone touched an all-time high of 10.7 percent in the month of October 2022. In September 2022, the consumer price index in Eurozone was posted at 9.9 percent, which was at that time the highest-ever rate.
European economies are facing one of the worst economic crises since the introduction of the Euro as a noncash monetary unit in 1999. High oil and gas prices coupled with the crisis within the global supply chain are said to be major reasons for high inflation in the Eurozone economies.
The latest surge in inflation rates will put more pressure on European Central Bank to hike interest rates which are expected to bring down high prices in the economy. European Central Bank will have to continue following an aggressive rate hike policy despite a sharp slowdown in the growth of Eurozone economies in the third quarter of the current financial year.
A survey of economists and market analysts, conducted by Reuters News Agency had projected Eurozone inflation at 10.2 percent in October 2022. The numbers released by Eurostat broke all projections and expectations of economists and market analysts. The consumer price index has now overshot the target inflation of the European Central Bank by more than 5 times.
It is also important to note that inflation in Eurozone economies is surging at a time when energy prices are coming down in the international market. This economic phenomenon is going to make it tougher for ECB to bring prices under the target rate.
ECB a few days ago increased the benchmark Interest rate by 0.75 percent in order to bring under control high inflation in the Eurozone economies. The central bank also hinted that there would be more rate hikes in the future. Each rate hike by the central banks across the world is pushing the global economy towards recession.
The Latest Gross Domestic Product growth numbers from Euro economies suggest that the economies in the region grew at a rate of 0.2 percent in the third quarter. In the previous quarter, the gross domestic product growth rate stood at 0.8 percent.
Energy prices rose by 41.9 percent in October 2022 signaling a severe energy crisis faced by the European economies. The rate of increase was 40.7 percent in September. Prices of food, alcohol, and tobacco rose 13.1 percent, up from 11.8 percent in September.