Eurozone inflation hits new record of 9.1% amid soaring food and energy prices

Inflation continues to hit new records as the European Central Bank considers another big rate hike next month.

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Eurozone inflation hit a new record high of 9.1% in August, according to preliminary figures from the European statistics agency Eurostat, largely driven by high energy prices.

Interest rates beat expectations, with a Reuters poll of economists expecting rates to hit 9%.

The rate marks the ninth consecutive record of consumer price increases in the region that began in November 2021. Headline inflation in the euro zone he reached 8.9% (year-on-year) in July.

French inflation eased to 6.5% in August, down from 6.8% in July, it was announced on Wednesday. The rate is lower than expected and Reuters economists expect him to drop to 6.7%.

Spain’s inflation rate also slowed to 10.4% in August from 10.8% in July, according to preliminary figures from the National Institute of Statistics.

Meanwhile, in Germany, the region’s largest economy, inflation reached its highest level in almost half a century in August at 8.8% year-on-year.

ECB ‘has some work to do’

Inflation continues to hit new records as the European Central Bank considers another big rate hike next month.

The ECB raised interest rates by 50 basis points to zero on July 21st. This is his first rate hike in 11 years, and a similar or larger rate hike is expected on Sept. 8.

“Some members are in favor of a 75 basis point rate hike,” Peter Schaffric, global macro strategist at RBC Capital Markets, told CNBC’s Squawk Box Europe.

“Even though the economy will almost certainly slow down, the central bank will not stop raising rates,” he said.

The outlook for the European economy is “pretty bleak,” Kenneth Watlett, head of economics at S&P Global Market Intelligence, told CNBC’s Street Signs Europe on Aug. 23.

“It seems inevitable that the eurozone is headed for recession. The only question is how deep the recession is and how long it will last,” he said. Economists say the ECB “has some work to do”.

“The ECB is far behind and inflation is very high and likely to remain so for at least the next seven months,” Watlett said.

French Finance Minister Bruno Le Maire told CNBC’s Charlotte Read on Tuesday that inflation is the main focus of European countries in the near term. A key challenge facing the United States is to reduce the level of inflation across Europe.”

“So it is up to the ECB to make the right decision, and we have full confidence that the ECB will make the right decision, but the key point is to bring inflation down everywhere in Europe,” he said. rice field.

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