December 9, 2022

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Eurozone inflation hits another record, hitting 10 percent in September

Eurozone inflation hits another record, hitting 10 percent in September

Inflation was eating away at living standards and savings not only in Europe but around the world. Supply chain buildup and disruptions from the coronavirus pandemic, and the upsurge in activity that accompanied the reopening of economies, have pushed prices up. The rise in energy and food prices that followed the Russian invasion of Ukraine has also fueled inflation, with sanctions imposed by Europe, the United States and its allies.

The European Central Bank They have been aggressively raising rates in the hope of stopping the inflation trend across the Eurozone. On Thursday, European Central Bank policy makers shown They are likely to agree to another rate hike of three-quarters of a point at their next meeting, in late October.

The Fed’s determination to beat inflation with rising interest rates drove prices lower in the US, but also pushed them higher elsewhere. Concern about global political and economic turmoil encouraged investors to invest their money in US stocks and assets as they are considered havens in times of turmoil. Higher interest rates make those investments more attractive by offering greater returns.

The result is that the United States exports some of its inflation to other countries. As the dollar rises, imports from around the world become cheaper in the United States, helping to curb inflation there. The other side is that a file strong dollar It makes imports in other countries, particularly essential imports like energy and food, more expensive to buy in weaker currencies. The dollar is the world’s reserve currency and many commodities, such as oil, are priced in dollars.

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Inflation across the European Union, which includes 27 countries, rose above an annual pace of 10 percent already in August, as countries without the euro saw energy and food prices rise to record levels. In the Czech Republic experienced mass protests In terms of high energy cost, inflation reached more than 17% in August, the same rate that Poland recorded for September, which has been a 25-year record.

in Britain, Consumer prices rose 9.9 percent in August from a year earlier, down from 10.1 percent in the previous month, but still close to the fastest pace in 40 years. Families and businesses in Britain are feeling tight on their budgets, hand in hand market turmoil This week it comes from the government new economic strategy That turned mortgages, pensions, and the value of the pound upside down.

Many experts say Europe’s shift away from Russian energy is a slow process and is likely to keep oil, gas and electricity prices at painful levels for years.

When there is a major shortage of energy driving up prices, there is only so much central bankers can do about it, said Sven Smit, senior partner at consultancy McKinsey. He said higher interest rates cannot suddenly create more supply, so prices will remain high.