According to preliminary data from the European statistics office Eurostat, the rate of inflation in the euro zone reached a new record high of 9.1% in August. The primary contributor was the rise in energy prices.
According to a Reuters poll of economists, a rate of 9% was projected; the actual rate was higher.
Since the beginning of the climb in November 2021, the rate has been the ninth consecutive record for rising consumer prices in the area. In July, the headline inflation rate in the euro zone reached 8.9% (year over year).
According to a statement released on Wednesday, the French inflation rate dropped to 6.5% in August from 6.8% in July. Reuters economists had predicted a decline to 6.7%, thus the rate is lower than they had predicted.
According to preliminary data from the National Statistics Institute, Spain likewise reported a lowering rate of inflation in August, coming in at 10.4% yearly compared to 10.8% for July.
In the meantime, inflation in Germany, the largest economy in the region, rose to 8.8% year-over-year in August, the highest level in nearly 50 years.
“Some catching up to do” for the ECB
At the same time that the European Central Bank is considering another significant interest rate hike for next month, inflation is still setting new milestones.
For the first time in 11 years, the ECB raised interest rates by 50 basis points on July 21 to zero, and a comparable or higher increase is now anticipated on September 8.
“Some members are inclined to advocate a 75 basis points interest rate increase,” the statement was made on Wednesday on “Squawk Box Europe” on CNBC by Peter Schaffrik, global macro strategist at RBC Capital Markets.
“Despite the slowdown in the economy that we will almost certainly be getting, the central banks won’t let up on their hiking path,” he said.
On August 23, Kenneth Wattret, head of economics at S&P Global Market Intelligence, said on CNBC’s “Street Signs Europe” that the future for the European economy is “pretty bleak.”
“It looks inevitable that the euro area is headed for a recession. The question is only how deep it will be and how long it will last,” he stated. The analyst said that the ECB “has some catching up to do.”
“The ECB is way behind the curve, inflation is exceptionally elevated and likely remain that way for at least the next seven months,” Wattret said.
Inflation is a top concern for the countries of Europe in the short term, France’s Finance Minister Bruno Le Maire said in an interview with Charlotte Reed for CNBC on Tuesday. “The key challenge that we all have to face for the next weeks and the next months, is to reduce the level of inflation everywhere in Europe,” Le Maire said.
“So it’s up to the ECB to take the right decisions, and we fully trust the ECB to take the right decisions, but the key point is to have a decrease in the level of inflation everywhere in Europe,” he said.