Inflation in the eurozone, the subset of 19 European Union nations that use the euro as their national currency, blew past expectations in October, setting records as the continent is pummeled by an energy crisis driven by the war in Ukraine, according to an early estimation by the EU’s official statistics body, Eurostat.
Consumer prices soared in October, growing 10.7% compared to last year, the highest level since eurozone inflation was first measured in 1997, The Wall Street Journal reported. Inflation was expected to rise to 10% in October, up from 9.9% in September, according to a survey of economists conducted by the WSJ. (RELATED: European Central Bank Takes Action As EU Teeters On Brink Of Recession)
Energy prices skyrocketed, up 42% on an annual basis in October, while food, alcohol and tobacco rose by 13.1%, Eurostat reported. Core inflation, which does not include energy, food, alcohol and tobacco prices due to their relative volatility, rose to 5% year-on-year in October, up from 4.8% in September.
OOPS! #Eurozone #Inflation soars to new record. Prices jumped by record 10.7% in Oct, far exceeding the 10.3% BBG median estimate. Core Inflation accelerated to 5%, a fresh record as well. pic.twitter.com/dhx0KxdEJO
— Holger Zschaepitz (@Schuldensuehner) October 31, 2022
The spike comes just one week after the European Central Bank (ECB) announced a 0.75 percentage point hike in interest rates to 1.5% as part of its bid to bring inflation down. Some investors had hoped that, going forward, the ECB would slow interest rate hikes to ease pressure on the European economy, but such a move now seems less likely, the WSJ reported.
“Overall, the picture remains bleak,” said Bert Colijn, senior economist at Dutch banking firm ING, in a note to clients, according to CNN. “We therefore still expect the economy to contract over the coming quarters.”
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