According to official data released on August 31 local time, inflation in 19 countries in the euro area reached 9.1% in August this year, the highest level on record.
Eurostat released this record inflation data on the same day, with France having the lowest inflation rate in the euro area at 6.5%, while the three Baltic countries of Estonia, Lithuania and Latvia ranked in the top three in the euro area, and all exceeded 20%.
Agence France-Presse pointed out that against the backdrop of soaring energy prices due to factors such as the Russian-Ukrainian conflict, this inflation data has increased the pressure on the ECB to raise interest rates to curb the current price increase.
Screenshot of the AFP report
Inflation in the euro area is expected to be 9.1 percent in August, up from 8.9 percent in July and 8.6 percent in June, a record high, according to Eurostat estimates.
By category, energy prices in eurozone countries surged 38.3% (up from 39.6% in July); Food, alcohol and tobacco prices rose 10.6% (from 9.8% in July); Prices of non-energy industrial goods rose 5.0% (4.5% in July); Services rose 3.8 percent (up from 3.7 percent in July). With the exception of a slight contraction in energy prices, prices in all other areas exceeded the price level in July.
According to the statistics of price increases in various areas of the euro area, energy is still the largest. Image from eurostat website
As France has taken steps to limit energy prices, its inflation rate in August was 6.5%, the lowest in the euro area. However, inflation in Germany, the eurozone's other largest economy, was 8.8 percent in August, compared with 9.0 percent in Italy and 10.3 percent in Spain. In addition, 9 out of 19 eurozone countries have inflation rates of more than 10%.
The baltic countries of Estonia, Lithuania and Latvia continue to face the greatest inflationary pressures, continuing to rank in the top three of the eurozone at 25.2%, 21.1% and 20.8% respectively.
A list of inflation rates in the 19 countries of the Euro area is shown on the Eurostat website
AFP said headline inflation had been rising since November, followed by a Russian-Ukrainian conflict in February, and a summer drought in Europe that pushed up food prices even further.
In the face of this situation, the ECB is expected to announce a rate hike at its next meeting on September 8, after the ECB had announced a rate hike in July, the first time in 10 years.
Bundesbank President Joachim Nagel said the ECB should be prepared for a "sharp rise in interest rates in September", warning: "Otherwise, inflation expectations could always be above the 2% target we set." ”
A French consumer pays in euros pictured by Reuters
Jack Allen-Reynolds, an economist at Capital Economics, a British economic research firm, has warned that even if the ECB raises interest rates, inflation in the eurozone could reach 10 percent by the end of the year.
"The balance of possibilities is shifting to a 75 basis point rate hike next week." At its monetary policy meeting in July, the ECB raised the deposit mechanism rate by 50 basis points to 0%, the marginal lending rate by 50 basis points to 0.75%, and the major refinancing rate by 50 basis points to 0.5%, he said.
Burt Colin, senior economist at ING, argues that the rise in the price of non-energy industrial goods should be the same as the rise in energy prices, which worries observers. He said the price figure rose from 4.5 percent to 5 percent, well above expectations, while wage growth in the second quarter of this year was just 2.1 percent, suggesting "Europe is already tightening its belts".
"With the economy slowing down rapidly, perhaps already contracting at this point, the question is how much the ECB needs to put the brakes on." Colin said: "Another rate hike of at least 50 basis points in September seems to have been set in stone, and hawks are pushing for a 75 basis point hike. ”
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