Inflation in the euro area hit an all-time high this month, pushed up to 9.1% due to soaring energy costs caused by the war in Ukraine.
This is the ninth consecutive month of record inflation in Europe, with consumer prices rising steadily since November 2021.
The UK currently has the worst inflation among the G7 countries, hitting 10.1% in the 12 months to July.
According to statistics agency Eurostat, energy is the main driver of rising inflation in Europe, peaking at an annual inflation rate of 38.3%.
Food, alcohol and tobacco also rose to 10.6%, compared with 9.8% in July.
Within the EU, a number of countries have overcome the bloc’s negative inflation levels.
Estonia – one of the poorer countries in the union – has the highest inflation rate in the eurozone at 25.2%, followed by Lithuania at 21.1% and Latvia at 20.8%.
Economists at investment bank Goldman Sachs warned on Tuesday that UK inflation could exceed 22% next year if petrol prices are not pushed down.
“In a scenario where gas prices remain elevated at current levels, we expect the price cap to rise by more than 80% in January (compared to the 19% assumed in our base),” they said in a statement. a research note.
“(This) would imply headline inflation peaked at 22.4%, well above our baseline forecast of 14.8%.”
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What is driving the spike in inflation?
Last week, Citi economists said consumer price inflation peaked at 18.6% in January, more than nine times the Bank of England target.
Goldman said it expected the recession to begin in the fourth quarter, with the economy expected to shrink 0.6 percent in 2023.
Spain, meanwhile, reported that inflation is likely to start to slow, falling from 10.7% in July to 10.3% in August.
In July, the euro common currency fell below par against the dollar for the first time in nearly 20 years.
A few weeks later, the European Central Bank (ECB) raised interest rates for for the first time in 11 years.
The bank raised its main policy rate by 50 basis points, surprising some economists – and is expected to raise rates again on September 8.
