Eurozone Inflation Hits Double-digit For First Time On Record

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Eurozone inflation moved into double-digits for the first time on record in September as the single currency bloc struggles to meet energy needs amid an acute shortage, official data revealed on Friday.

Inflation advanced to 10.0 percent in September from 9.1 percent in August, Eurostat reported. The rate exceeded economists’ forecast of 9.7 percent.

Excluding energy, food, alcohol and tobacco, core inflation advanced to 4.8 percent in September from 4.3 percent a month ago. The core rate was forecast to rise to 4.7 percent.

On a monthly basis, the harmonized index of consumer prices gained 1.2 percent. Final data is due on October 19.

Given the strength of inflation and continued evidence of price pressures, the European Central Bank is expected to raise rates by at least another 75 basis points at its late October meeting, to a minimum of 1.5 percent, Jessica Hinds, an economist at Capital Economics, said.

Despite the risks of a deeper recession, the economist said she would not rule out an even bigger rise.

At the September meeting, the ECB had raised its interest rate by 75 basis points and signaled more tightening in the coming months.

The euro area is undergoing an acute energy shortage ahead of the winter. Adding to the current energy crisis and further exacerbating relations with Russia, the EU suspects sabotage for the leaks in the Nord Stream pipeline carrying gas from Russia to Europe.

Among main four components of the HICP, energy prices posted the biggest annual increase of 40.8 percent. This was followed by an 11.8 percent increase in food, alcohol and tobacco prices.

Non-energy industrial goods prices and services cost gained 5.6 percent and 4.3 percent, respectively.

Data released earlier showed that inflation accelerated in Germany and Italy, while France and Spain registered slower rates in September.

Germany’s EU harmonized inflation advanced to a record 10.9 percent in September from 8.8 percent in August. The German government agreed a support package on Thursday, to help companies and households from soaring energy bills.

Italy also reported a faster rate of 9.5 percent, following Augusts’9.1 percent.

Meanwhile, inflation in France eased to 6.2 percent from 6.6 percent. Similarly, Spain’s inflation slowed to 9.3 percent from 10.5 percent.

Separate data from Eurostat showed that the unemployment rate remained at a record low in August. The jobless rate came in at 6.6 percent, unchanged from July but down from 7.5 percent in August 2021.

The number of people out of work decreased 30,000 from July to 10.966 million in August. Compared to last year, unemployment fell 1.358 million.

The unemployment rate among young persons aged below 25, dropped to 13.9 percent in August from 14.0 percent in July.

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