Eurozone Inflation Sets Another Record, Hitting 10 Percent in September

Excluding food and energy, so-called core inflation rose 4.8 percent in the year through September, up from 4.3 percent the month before.

Ms. Reichlin added that there was still a lot of uncertainty about how inflation would develop in the coming months, “because the economy will slow down in the future and that will have downward pressure on inflation.”

Pantheon Macroeconomics, a research firm, noted that government policies designed to manage soaring energy costs would also be “a key swing factor” influencing prices over the next six months.

Inflation has been gnawing not just at Europe’s economy but at those all over the world. Supply chain backlogs and disruptions stemming from the coronavirus pandemic, and the surge of activity that accompanied the reopening of economies, have pushed up prices. The soaring cost of energy and food that followed Russia’s invasion of Ukraine also stoked inflation, with sanctions imposed by Europe, the United States and their allies turbocharging it.

The European Central Bank has been aggressively raising rates in hopes of halting inflation’s march across the eurozone. On Thursday, E.C.B. policymakers indicated that they are likely to approve another three-quarter-point interest rate increase at their next meeting, in late October.

Europe’s transition from Russian energy is expected to be a slow process and keep oil, gas and electricity prices at painful levels for years. There is little that the central bank can do to counter significant energy shortages like those that Europe is experiencing, said Sven Smit, the chairman of the McKinsey Global Institute. Steeper interest rates cannot suddenly manufacture more supply, he said, so prices will remain high.

In the United States, one measure of annual inflation slowed in August to 6.2 percent, from 6.4 percent in the previous month, according to data released on Friday. The lower rate reflected a decline in American gasoline prices.

Article source: https://www.nytimes.com/2022/09/30/business/eurozone-inflation.html