Eurozone inflation hits 13-year high
By Sean Farrell
Date: Wednesday 17 Nov 2021
(Sharecast News) - Eurozone inflation rose to a 13-year high as expected in October as rising energy prices hit household budgets.
The headline annual rate of inflation rose to 4.1% from 3.4% a month earlier, matching an earlier estimate and market expectations.
The increase in inflation was driven by the surging cost of energy, which offset downward revisions to food, alcohol and tobacco price rises. The core rate nudged higher by 0.1 percentage point to 2%, just below the initial estimate and consensus of 2.1%.
Central banks are struggling to judge whether rising prices are the result of short-term factors as economies reopen or are becoming entrenched. European Central Bank president Christine Lagarde said on Monday price rises inflation would be more intense and long-lasting than expected but that tightening monetary policy could stall the recovery.
"Headline inflation is set to remain high throughout Q4. It will then fall off a cliff in Q1 due a drop in the core rate as base effects from last year's temporary VAT cut in Germany fall out of the annual calculation," Melanie Debono at Pantheon Macroeconomics, said. "The core will then rebound strongly in the middle of next year, providing a challenge for the ECB as it moves to wind down emergency stimulus."
UK inflation hit a decade high in October, figures showed on Wednesday. As in the eurozone, UK prices were boosted by rising energy costs.
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