By Scott Kanowsky
Investing.com — Eurozone inflation touched a fresh record high in September, fuelled in particular by soaring costs for energy, according to Eurostat data.
The of the currency bloc’s consumer price index for the month came in at 10%, up from 9.1% in August and above economists’ estimates of 9.7%.
On a monthly basis, the grew by 1.2%, up from 0.6% in August. Analysts had expected an increase of 0.9%.
Energy prices jumped by 40.8%, rising from 38.6% in the prior month, hinting at the impact a cutoff in key Russian gas supplies is having on the Eurozone. Costs for food, non-energy industrial goods, and services all moved higher as well, Eurostat said.
, which is racing to ween itself off of Russian gas, led the inflation surge. German consumer prices leapt to double-digit levels for the first time in more than 70 years, causing some economists to predict that Europe’s largest economy could slide by as much as 7.9% in 2023.
Berlin responded to this spike in inflation by unveiling a €200B plan to bring down gas and electricity prices, with finance minister Christian Lindner claiming that Germany is engaged in an “energy war” with Russia.
Price rises also ticked up in , although and – Europe’s second- and fourth-biggest economies, respectively – showed lower inflation.
Analysts at Oxford Economics said Friday’s numbers may prompt yet more aggressive interest from the European Central Bank, adding that it will most likely raise borrowing costs by a further 75 basis points.
This week, ECB members doubled down on their stated aim to quell red-hot inflation, with president Christine Lagarde calling price stability the central bank’s “primary objective.”
She added that its “first destination” is to achieve a return to the so-called “neutral rate,” which neither spurs nor hinders economic growth. ECB officials have predicted that that mark could be between 1% to 2% in the Eurozone.
The Frankfurt-based ECB has increased interest rates by a combined 125 basis points at its previous two meetings – its fastest pace of hikes ever. Its key deposit rate, which provides the effective floor for money-market rates, now stands at 0.75%, while the refinancing rate is 1.25% and the overnight lending rate is 1.50%.