Eurozone inflation reaches new record high of 10%

Preliminary figures show that the eurozone’s inflation hit double digits and reached yet another all-time high in September, as the negative effects of Russia’s war in Ukraine continue to have a significant impact on the European economy.

According to Eurostat, the statistical arm of the European Union, inflation in the 19-nation euro area increased to 10.0 percent in September from 9.1 percent in August. Energy costs, which are currently 40.8 percent higher than they were in the same month last year, were the main driver of the most recent price increase, while costs for food, alcohol, and cigarettes are thought to have increased by 11.8 percent on a yearly basis.

The Baltic countries continue to be the most severely affected, with inflation rates in Estonia, Lithuania, and Latvia of 24,2,5, and 22,4, respectively. France has the lowest percentage, at 6.2 percent, with Malta and Finland following (7.3 percent and 8.4 percent ). The most recent statistics were made public right before EU energy ministers convened an emergency conference in Brussels and agreed on measures to help reduce high electricity prices.

These include compulsory electricity demand reduction, putting a cap on the income of non-gas electricity manufacturers (also known as inframarginal producers), and the seizure of ‘excess profits’ from fossil fuel producers. The last two measures may see billions of euros redirected toward catering for vulnerable households and businesses.

The focus of current discussions is anticipated to be on lowering gas prices, which have a significant impact on energy costs in Europe. The most recent inflation reading for the eurozone is also probably going to put further pressure on the European Central Bank (ECB) to raise interest rates. The Frankfurt-based institution raised its three main interest rates by 75 basis points earlier this month, which was the first increase in 11 years and its largest increase ever.

The inflation rate is now predicted to average 8.1 percent this year and 5.5 percent in 2023, according to estimates, which were dramatically revised upward. The organization’s governing board stated at the time that it intended to boost rates further over the “next several meetings” Meanwhile, it was predicted that economic growth would slow down to 3.1% this year and 0.91% the following year.

The Organisation for Economic Co-operation and Development (OECD) issued a warning earlier this week that, in the event of winter energy interruptions, many European nations, including economic powerhouse Germany, could be forced into “a full-year recession in 2023″