Consumer price inflation in Eurozone has reached its highest level since records began in 1997, according to figures from Eurostat, the EU statistic agency. The latest figures show that energy prices grew at an annual rate of almost 42% in June, prompting the European Central Bank to plan its first interest rate hike in 11 years later this month.
Alastair George, chief investment strategist at financial research firm Edison Group, said current inflation, more than four times the 2% target, would make life more difficult for low-income consumers. With the ongoing Russia-Ukraine war contributing to higher oil and gas prices across the continent, the surging inflation put pressure on households in the 19 EU member states.
In addition, people are facing sharp rises in the prices of food, alcohol and tobacco, as well as a 4.3% year-on-year increase in the prices of non-energy industrial goods. The U.K. is suffering a more severe inflation and a worse economic slowdown than other major economies in light of its 9.1% inflation in May, which is above the mean in the Eurozone and the highest among the G7.
In addition to European countries, the U.S. is also experiencing the worst inflation in 40 years, putting the Federal Reserve under pressure to raise interest rates, given the pandemic has disrupted global supply chains and the Russia-Ukraine war has pushed up energy prices. This week, leaders of the U.S. Federal Reserve, European Central Bank and Bank of England said the world economy was stepping into a new period of sustained high inflation under the impact of the CCP virus pandemic.