Shoppers walk on the Westenhellweg main shopping street in the city center of Dortmund, Germany, on Nov. 19, 2021. The Euro area, which includes Germany, saw inflation increase to 10.7% in October over last year. File Photo by Friedemann Vogel/EPA-EFE
Oct. 31 (UPI) — Inflation in the euro area jumped to 10.7% in October, creating more pressure on the European Central Bank to take stronger action as Russia’s invasion of Ukraine continues to harm western markets.
It marked the first time the 19-country euro area inflation rate has skied above the 10% mark since its formation. Energy cost, at the heart of the European Union’s sanctions against Russia because of the war, increased 41.9% in October from the same time in 2021, compared to 40.7% in September.
Eurostat said food, alcohol and tobacco increased 13.1%, compared with 11.8% in September, non-energy industrial goods jumped 6% compared with 5.5% in September, while services ballooned 4.4% compared with 4.3% in September.
Inflation rates in euro area companies varied greatly — from 7.1% in France in October and 7.3% in Spain, to 11.6% in Germany, to 22.4%in Estonia and 22% in Lithuania.
“This is a significant acceleration,” said Lucrezia Reichlin, an economist at the London Business School. “Inflation is becoming broad-based.”
Despite Germany’s double-digit inflation woes, its economy grew 0.3% in the third quarter, buoyed by consumer spending. Sweden’s economy grew by 0.7% and Italy’s economy expanded by 0.5%.
“The increase in euro area GDP in the third quarter does not alter our view that the euro area is on the cusp of a recession,” Andrew Kenningham, chief Europe economist at Capital Economics, said.
“But with inflation having jumped to well over 10%, the ECB will prioritize price stability and press on with rate hikes regardless.”