Inflation in the euro zone rose sharply again in October. Compared to the same month last year, consumer prices rose by 10.7 percent, as the statistics office Eurostat announced today in Luxembourg in a first estimate.
Economists had expected a rate of 10.3 percent. The October rate is the highest since the euro was introduced as book money in 1999. In September, consumer prices rose by 9.9 percent.
“The dynamic of inflation is frightening,” comments Thomas Gitzel, chief economist at VP Bank. “Inflation has become a mighty tanker whose bow wave will push economic growth aside.” In the third quarter, the economy in the euro zone grew 0.2 percent quarter-on-quarter, slightly more than expected. “It was mainly corona catch-up effects that kept GDP afloat,” writes Gitzel.
there is no end in sight
“The inflation rate has probably still not peaked,” writes Commerzbank economist Christoph Weil. The goal of the European Central Bank (ECB) to bring the inflation rate back down to just under two percent is a long way off. “It will once again have to revise its inflation projections significantly upwards in December,” said Weil.
This should also increase the pressure on the Governing Council of the ECB to continue raising key interest rates sharply. Commerzbank again expects an increase of 0.75 percentage points in December. The central bank raised the key interest rate again by 0.75 percentage points last Thursday. Since July, the ECB has raised the main refinancing rate from zero percent to 2.0 percent.
Energy prices drive inflation
Inflation in October was again driven by the sharp increase in energy prices, which rose by 41.9 percent compared to the same month last year. At the same time, however, the upward trend in prices for food and beverages accelerated, increasing by 13.1 percent compared to the previous year. The prices of non-energy industrial goods and services also rose more sharply.
Core inflation, which does not take into account the prices of energy, food and luxury goods, which are particularly susceptible to fluctuations, rose from 4.8 to 5.0 percent compared to the previous year.
Compared to September, consumer prices increased by 1.5 percent in October. An increase of 1.2 percent was expected here.
The three Baltic states once again had the highest inflation rates in the currency area, at more than 20 percent. The annual inflation rate in Estonia was 22.4 percent. In Germany, the inflation rate calculated according to European standards rose to 11.6 percent. At 7.1 percent, France has the lowest inflation rate in the euro zone.
