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Global Economy

Eurozone: Inflation rises again to record high

Consumer prices rose by 8.6 percent year-on-year in June. This means that the inflation rate in the euro zone has once again risen to a record high, according to an initial estimate by the statistics office Eurostat.

Economists had expected an average rate of 8.5 percent. In the previous month, the price increase was 8.1 percent. On a monthly basis, consumer prices in the countries with the common currency rose by 0.8 percent in June. An increase of 0.7 percent had been expected here.

Inflation was once again driven by an extremely sharp increase in energy prices, which rose by 41.9 percent compared to the same month last year. Food and beverages were 8.9 percent more expensive than a year ago.

Inflation never this high since the introduction of the euro

The inflation rate in the euro area has never been higher since the introduction of the single currency in 1999. Inflation has risen steadily since the summer of 2021. The war in Ukraine and the tough corona measures in China exacerbated the upward trend in prices.

The highest inflation rates were again in the Baltic States. In Estonia, for example, the annual rate rose to 22 percent. In Germany, the rate fell against the trend from 8.7 percent in the previous month to 8.2 percent in June. However, government measures such as the introduction of the 9-euro ticket were responsible for the decline.

The national data collected in the individual countries, some of which are quite different, are made comparable across the EU in the Harmonized Index of Consumer Prices. These HICP data can then deviate from the national values. The Federal Statistical Office in Wiesbaden reported an increase in consumer prices of 7.6 percent in June after 7.9 percent in May.

In view of the high inflation, the European Central Bank (ECB) has announced an initial interest rate hike for July. It is lagging behind not only the US central bank, but also other European central banks.

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