Amidst fears of a global economic slowdown, inflation in the Euro Zone is climbing up fast showing no sign of economic respite.
According to the latest flash figures released by Eurostat, the inflation rate in Eurozone stood at 9.1% in the month of August. The 9.1% inflation is a new record high in the Eurozone region and is expected to have a huge impact on European economies.
Eurostat is the official statistical office of the European Union and operates under the European Commission.
Increasing energy prices in Europe and domestic economic crisis fuelled by the Russia Ukraine conflict are the main driving force of the increasing inflation in the eurozone.
A few days ago a Reuters Poll of economists and market analysts had predicted an inflation rate of 9% in the Euro zone.
In a commodity-wise analysis, the energy sector saw a small decrease in the inflation rate from 39.6% in July 2022 to 38.3% in August 2022. The increasing demand for energy commodities and continuing supply chain issues in the oil and gas sector severally pushed the rate upwards in European economies. The demand for energy commodities is also seeing an upswing as winter is slowly approaching in the European states.
Food, Alcohol, and Tobacco prices increased from 9.85% in July to 10.6% in August. Heatwaves which occurred all around Europe during last few weeks and soaring temperatures contributed to the increase of prices and rates in this sector.
Industrial goods not related to energy also saw their prices going up by 0.5% when compared to July. The inflation rate in this sector has grown by almost 5% when calculated on a year-to-year basis. The service sector also saw a similar increase of 0.1% in the process. On a year-to-year basis, the prices in the service sector grew by nearly 3.8%.
Since November 2021, the consumer price indexes of the eurozone region hit record highs nearly 9 consecutive times.
Country wise analysis of inflation rates in the eurozone
Germany, which is the largest economy in the European Union witnessed inflation rates in the country moving up by 8.8% in the month of August (year on year). It is also important to note that the current inflation rate in Germany is the highest in the last 50 years. The inflation rate in the country currently stands at 7.9%.
The market analysts were expecting the rate to stand somewhere below 7.8% in August. A few days ago, various economists had suggested that Germany was slowly moving towards a recession. A slowdown in economic activity in the country resulted in steep decreases in the economic output. It also negatively impacted the purchasing managers’ index (PMI) of the Eurozone.
Inflation figures from France shown signs of slowing down as the inflation rate in the French economy in August decreased to 6.5%. In July, the rate was standing at 6.8%. Inflation rates put up by the country exceeded expectations of market analysts who predicted a drop to 6.7%.
Spain also witnessed the inflation rate going down from 10.7% in July to 10.3% in August.
With economies in the eurozone posting increased inflation rates, the European Central Bank is reportedly planning to continue an aggressive approach to increasing benchmark interest rates.