Eurozone inflation reached a fresh high in October, preliminary data from Eurostat has revealed, with its consumer price index soaring to 10.7%, the highest monthly reading since the region formed.
Figures follow a decision by the European Central Bank to raise its three key interest rates by 75 basis points on Friday, 28 October, to control spiralling costs and runaway inflation.
Consumer prices jumped from 9.9% in September, the month holding the previous record, beating out economist expectations of between 9.8% and 10.3%.
Eurostat also reported energy costs jumped 41.9% over the month, with food, drink, and tobacco prices increasing 13.1%, up from 11.8% in September.
On Friday, data revealed German inflation had climbed to 11.6% in the year to October, against expectations of 10.9%, while inflation in Italy and France came in at 12.8% and 7.1%, respectively.
Agnes Belaisch, chief European strategist of the Barings Investment Institute, said the surprise upside was mostly driven by energy prices again:
“Government intervention in energy markets creates volatility. Last week, an upside adjustment in the regulated prices of gas and electricity in Italy surprised markets, although this was pre-announced,” she said.
“The downside of governments’ intervention on energy markets is also that a fall in wholesale energy prices cannot be passed through quickly. We expect inflation to remain high and around double digits in the euro area until the end of the year. Inflation expectations support a gradual moderation of inflation in 2023. The ECB aims to raise policy rates to keep it this way. A peak policy rate around 3% makes sense in this perspective.”
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