Eurozone inflation hits record 8.6%

 

Euro-area inflation hiked to a new record, exceeding expectations and maintaining needs for the kind of aggressive interest-rate increases being deployed by central banks across the world.

 

Driven once more by soaring food and energy costs, consumer prices jumped 8.6 per cent from a year earlier in June – up from 8.1 per cent in May. Economists surveyed by Bloomberg saw a gain of 8.5 per cent. The median estimate in the poll has fallen short for 11 of the last 12 months. The data reveal an escalating reduction in households and firms across the 19-member currency bloc, where France, Italy and Spain reported new all-time highs this week. 

The continent’s No 1, the German economy, only saw a downshift thanks to fuel-tax cuts and public-transport discounts that are temporary. In the Baltic region, price growth has shot past 20 per cent.

Economists polled by Reuters had expected eurozone inflation of 8.4 per cent. Claus Vistesen, an economist at Pantheon Macroeconomics, said the bigger than expected rise “increases the risk” that the ECB will raise rates by more than its planned quarter percentage point at its meeting in three weeks, adding the central bank was “miles behind the curve”. ECB president Christine Lagarde said at the bank’s annual forum in Sintra, Portugal, this week that it would stick to its plan to begin raising interest rates with an increase of 25 basis points on July 21. She said a bigger move was likely in September unless there is a swift slowdown in inflation . Governments have supported it with billions of euros in support, but the pandemic spending of huge sums to manage the pandemic)  has limited government spending on this matter