Inflation in the eurozone countries increased to a new record high while the bloc’s economy slowed down, fueling concerns that a recession was now all but inevitable.
In October, consumer prices increased by 10.7% compared to the same month last year. Considerably above the survey’s median expectation of 10.3%.
In contrast, third-quarter output dropped to 0.2% from the prior three months. Which was more than analysts had predicted but significantly less than the 0.8% increase seen between April and June.
The increase is anticipate to reverse throughout the winter as the energy crisis continues to terrorise businesses and people.
After the data, European bonds continued to decline, with 10-year German rates rising by four basis points to 2.15%. At $0.9937, the euro was down 0.3%.
There was positive news this past week from Germany, the leading economy in the area. Which bucked forecasts of a recession by recording growth that was quicker than the preceding three months.
However, the European Central Bank’s sharp rises in interest rates are still expect to push Europe into a downturn in the ensuing quarters.
As a post-lockdown boom in the tourist and leisure industries peak. A sharp drop in the third quarter already seen in Spain and France.
These figures were released the day after the ECB increased borrowing costs by double to their highest level in over ten years. With officials later endorsing additional significant steps to force prices back toward their 2% objective.
“Another spike in inflation in October confirms the challenging nature of the fourth quarter. A recession will probably last through the winter if financial circumstances continue to tighten quickly.”
The inflation statistics from Monday didn’t inspire much hope. Energy and food prices continued to drive the headline number, but a separate gauge that does not include those costs also increased to a record level.
Italy announced an all-time high on Friday that was significantly higher than any economist surveyed.
Officials from the ECB insist that combating inflation is the top concern.
Klaas Knot, the head of the Dutch central bank, stated on Sunday that he prefers a rate increase of 50 or 75 basis points at the year’s final policy meeting in December, although recognising that a recession in the eurozone “is becoming more and more plausible.”
However, other authorities are worried about a recession and others have issued warnings against raising interest rates too rapidly.
The outcome of the discussion could impact how much the local economy contracts. Ignazio Visco of Italy warned on Monday that the risk that the economic outlook will worsen than anticipated and that a disproportionately quick step toward normalising interest rates will result shouldn’t be overlooked.
The future is still incredibly uncertain. Some wholesale energy costs have significantly decreased as a result of mild weather & stronger-than-expected natural gas supplies. But dangers still exist due to the direction of future supply and Russia’s conflict in Ukraine.