Eurozone inflation rises to record level

BRUSSELS: The eurozone inflation rate hit a new record of 9.1 percent in August, the EU statistics agency said Wednesday, increasing pressure on the European Central Bank to hike interest rates.

Driven by soaring fuel prices caused by the war in Ukraine, the yearly inflation rate in the 19-country single currency area is up from 8.9 percent in July and at its highest since records began.

The flash estimate of consumer price growth published by Eurostat on Wednesday was up from 8.9 per cent in July, which was itself a record high in the 23-year history of the euro. It was also higher than the 9 per cent expected by economists polled by Reuters.

The fallout from Russia’s invasion of Ukraine has sent wholesale gas and electricity prices surging to record levels in Europe in recent weeks and pushed up the cost of fertiliser and other agricultural commodities, such as wheat.

Eurostat reported a slight deceleration in energy prices, which increased 38.3 per cent in the year to August. Unprocessed food prices also rose at a slightly slower rate of 10.9 per cent.

The closely tracked measure of core inflation, which excludes more volatile energy and food prices to give economists a clearer idea of underlying price pressures, rose 4.3 per cent in August, up from 4 per cent in July.

Several ECB governing council members have warned that high inflation will become more entrenched as more consumers and businesses expect it to remain elevated, even if the eurozone slides into a recession this year as many economists expect.