Inflation in eurozone soars to new record high

Inflation in the eurozone has soared to a new record high – and is now worse than it is in Britain.

In a report that piles pressure on the European Central Bank (ECB) to push ahead with aggressive interest rate rises, official statistics agency Eurostat said inflation in the single currency bloc hit 10 per cent in September. 

That eclipses the 9.9 per cent rate seen in the UK and 8.5 per cent in the US, underlining how countries around the world are in the grip of a cost of living crisis. 

Households and businesses have been clobbered by the escalating price of everything from gas and electricity to fuel and food in the wake of the pandemic and the invasion of Ukraine. 

European countries in particular are suffering as Russia cuts off gas supplies while it wages war. 

Within the eurozone, inflation is highest in Estonia, at 24.2 per cent, and lowest in France, at 6.2 per cent, thanks to large subsidies on energy bills. In Germany it is at a 70-year high of 10.9 per cent, while in the Netherlands it is 17.1 per cent. 

The figures will pile pressure on the ECB to continue raising rates in the coming months to bring inflation back under control. 

It hiked rates for the first time in over a decade in July, taking them from minus 0.5 per cent to zero, before increasing them again to 0.75 per cent in September. Another bumper 0.75 percentage point increase is expected this month. 

ECB president Christine Lagarde this week said ‘we will do what we have to do’ to tackle inflation, and Slovak central bank governor Peter Kazimir said: ‘We have to be vigorous, even ruthless, regardless of the looming recession.’ 

Reacting to the latest surge in inflation yesterday, analysts at ING said: ‘ECB officials have all the reason to continue stepping up the hawkish rhetoric.’ 

The Bank of England is also expected to take forceful action at its next meeting, to be held in early November. 

A poll by Reuters found economists do not believe there will be an emergency rate hike in the UK before next month. 

But they think there will then be a rise of 0.75 or one percentage point in November.