Recently released data from Eurostat, the statistical office of the European Union, showed that Eurozone inflation has just reached a record-high 10.7 percent.
As per the Luxembourg-based agency, Baltic countries Estonia, Latvia and Lithuania remain the most deeply affected as they remain above the 20 percent mark. Estonia leads the pack with a 22.4 percent estimate. Meanwhile, Italy's annual rate of inflation jumped to 12.8 percent in October from 9.4 percent in September, while Germany's inflation rate rose to 11.6 percent from 10.9 percent.
Europe is paying higher prices for natural gas as they sourced out elsewhere since the Russian oil embargo, causing high storage levels, prices on world markets falling from their peaks, household energy bills lagging behind and soaring food prices. As a result of these pressures, inflation in the region is now even worse than that of the United States.
Moreover, the sudden surge in inflation underlines the challenges facing the policy makers at the European Central Bank (ECB), whose primary target is to lower inflation by close to two percent as they confront a likely recession in the region.
"Inflation surged again in October and is a proper Halloween nightmare for the ECB," analysts at economic research consultancy firm Pantheon Macroeconomics said in an email.
According to Salomon Fiedler, an economist at multinational investment bank Berenberg, the continuing surge in consumer prices and still-resilient domestic demand in the summer indicate a "risk that the ECB may hike rates by 75 basis points in December, rather than the 50 basis points we currently expect." And true enough, ECB decided to raise rates by 75 basis points for a second consecutive time last week.
ECB confirms further rate hikes in coming months
On October 27, the ECB confirmed even further rate hikes in the coming months to bring prices down. According to a press release, it had made "substantial progress" in normalizing rates in the region, but it "expects to raise interest rates further, to ensure the timely return of inflation to its medium-term inflation target."
ECB President Christine Lagarde said the likelihood of a recession in the Eurozone had intensified due to "slowed" economic activity in the third quarter of the year. "We expect a further weakening in the remainder of this year and the beginning of next year," she added.
Since September, Lagarde has been warning about a dark economic outlook in the continent, saying that "inflation remains far too high and is likely to stay above our target for an extended period." (Related: European Central Bank head warns of darkening economic outlook for the continent, raising recession fears.)
Lagarde, a former International Monetary Fund (IMF) managing director, spoke before the European Parliament's Committee on Economic and Monetary Affairs and warned of the economic consequences of "Russia's unjustified war of aggression on Ukraine" that have sent fuel prices skyrocketing.
According to her, high inflation is being reinforced by gas supply disruption and the uncertainty and falling household and business confidence were also contributing to the negative predictions on the economy.
She admitted the situation is expected to "get worse before it gets better" with regard to high energy and food costs, which according to a Eurobarometer survey, are the most important issues for two out of three Europeans at the moment. Lagarde also advised governments to provide households and businesses with temporary subsidies to offset soaring energy costs.
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Watch the below video that talks about how the Eurozone inflation becomes a prelude to war.
This video is from Cynthia's Pursuit of Truth channel on Brighteon.com.
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