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With Food And Energy Prices Rise, Eurozone Inflation Reaches A New High Of 9.1%

With Food And Energy Prices Rise, Eurozone Inflation Reaches A New High Of 9.1%
According to Eurostat's flash figures, Eurozone inflation reached a new high of 9.1per cent in August, with high energy prices being the main driver.
The rate was higher than expected, with economists polled by Reuters expecting a rate of 9 per cent. It is the region's ninth consecutive record for consumer price increases, with the rise beginning in November 2021. In July, eurozone headline inflation was 8.9 per cent year on year.
According to Eurostat, energy had the highest annual inflation rate of 38.3per cent, down slightly from 39.6 per cent in July. Food, alcohol, and tobacco increased 10.6per cent compared to 9.8 per cent in July, with recent heatwaves across the continent contributing to the increase.
Non-energy industrial goods such as clothing, household appliances, and automobiles increased 5 per cent year on year, a 0.5 percentage point increase over the previous month, while services increased 3.8per cent year on year, a 0.1 percentage point increase over July.
Looking at national figures, the French inflation rate fell to 6.5 per cent in August, from 6.8 per cent in July. The rate was lower than expected, with economists polled by Reuters expecting a drop to 6.7 per cent.
According to the Eurostat flash estimate, Spain's inflation rate for August was 10.3per cent year on year, down from 10.7 per cent in July.
Meanwhile, Germany, the region's largest economy, saw inflation reach its highest level in nearly half a century in August, at 8.8 per cent year on year.
Estonia currently has the eurozone's highest inflation rate of 25.2per cent, followed by Lithuania (21.1 per cent) and Latvia (20.8per cent). Malta and Finland have the lowest inflation rates, at 7.1per cent and 7.6per cent, respectively, after France.
Inflation continues to set new highs, just as the European Central Bank considers another significant interest rate hike for next month.
On July 21, the ECB raised interest rates by 50 basis points to zero, its first rate hike in 11 years, and a similar, or larger, hike is now expected on September 8.
“Some members are inclined to advocate a 75 basis points interest rate increase,” Peter Schaffrik, global macro strategist at RBC Capital Markets, told CNBC’s “Squawk Box Europe” on Wednesday.
“Despite the slowdown in the economy that we will almost certainly be getting, the central banks won’t let up on their hiking path,” he said.
On August 23, Kenneth Wattret, head of economics at S&P Global Market Intelligence, told CNBC's "Street Signs Europe" that the outlook for Europe's economy is "pretty bleak."
“It looks inevitable that the euro area is headed for a recession. The question is only how deep it will be and how long it will last,” he said. The ECB “has some catching up to do,” according to the economist.
“The ECB is way behind the curve, inflation is exceptionally elevated and likely remain that way for at least the next seven months,” Wattret said.

Christopher J. Mitchell

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