According to preliminary data, the inflation rate in the euro area was 10.7 percent in October. It was clearly more than economists’ expectations.
Consumer prices Inflation in the euro area accelerated to a new record again in October.
According to Eurostat’s preliminary data from the European Union’s Statistical Centre, the inflation rate in the euro area was 10.7 percent. In September, according to detailed information, it was 9.9 percent.
In October, compared to the same time last year, the price of energy rose by 41.9 percent, unprocessed food by 15.4 percent, industrial products by 6.0 percent, and services by 4.4 percent.
According to the news agency Reuters, economists expected the inflation rate to have been 10.2 percent in October.
Core inflation, carefully monitored by economists and central banks, was 6.4 percent in September. In September of last year, it was 6.0 percent. The impact of easily changing energy and food on consumer prices has been removed from core inflation.
in Finland according to Eurostat, the inflation rate in October was 8.3 percent, which is 0.1 percentage point less than in September. In October, inflation was slower than in Finland in Malta (7.5 percent), France (7.1 percent) and Spain (7.3 percent).
The strongest rise in consumer prices is still in the Baltics, where consumer prices rose by 22.4 percent from a year ago in Estonia, 22.0 percent in Lithuania and 21.8 percent in Latvia.
In Germany, Europe’s largest national economy, the inflation rate was 11.6 percent in October.
Unusually strong inflation is caused by supply disruptions and high demand in the global economy. The increase in energy costs already started a year ago, but Russia’s war of aggression against Ukraine accelerated it significantly.
The demand has been increased by the fact that at the beginning of the year, the states dismantled the restrictions introduced during the worst phase of the coronavirus pandemic and the consumption opportunities of households increased.
The European Central Bank is taming inflation by tightening monetary policy, which may hasten the eurozone’s descent into recession.
The tightening of monetary policy tends to reduce corporate investment and household consumption, because banks no longer grant loans on as favorable terms as before.
According to the central bank’s price stability objective, inflation should be two percent in the medium term.
Last week central bank tightened monetary policy 0.75 percentage points, which was the third rate hike this year. The next time the central bank will tighten monetary policy in December, but probably a little less.
The tightening of monetary policy usually starts to slow down the rate of inflation after six months and reaches its full effect in a good year. Several banks and investors estimated last week that the European Central Bank will tighten monetary policy by 0.50 percentage points in December.
On Monday based on the preliminary preliminary data published by Eurostat, the euro area has not derailed into recession at the beginning of autumn.
In July–September, gross domestic product, which measures the standard of living, grew by 0.2 percent from the previous quarter and by 2.1 percent from the corresponding time last year.
Economic growth was still clearly slower than in April–June, when the gross domestic product of the euro area grew by 0.8 percent from the previous quarter and 4.3 percent from a year ago.
of the euro area of the four largest national economies, seasonally adjusted gross domestic product increased in July–September from the previous quarter in Germany by 0.3 percent, in France by 0.2 percent, in Italy by 0.5 percent and in Spain by 0.2 percent.
Based on preliminary data, the gross domestic product shrank in the same reference period in Latvia by 1.7 percent, in Belgium by 0.1 percent and in Austria by 0.1 percent. Data for Finland are not yet available.
President of the European Central Bank Christine Lagarde estimated last week that the weakening of the euro area economy will continue at the end of the year and at the end of next year. Rapid inflation dampens consumption and production, as it reduces people’s real incomes and increases companies’ costs.
International the International Monetary Fund (IMF) estimated in mid-October that the energy crisis caused by Russia’s war of aggression and the collapse of consumer confidence will cause the most damage specifically to the economy of the euro area.
The IMF predicts that the euro area economy will grow by 3.1 percent this year, but only 0.5 percent next year.
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